"Retirees Now Frequently Base Their Retirement Decisions on the Portfolio Success Rates Found in Research Such as the Trinity Study.... This Is Not the Information They Need for Making Their Withdrawal Rate Decisions."

"Big Moves Out of Stocks Should Not Be Done at All. But Strategic Asset Allocation Can Be Done At Very Rare Times, Maybe Six Times in an Investor’s Lifetime, Three Times When the Market Is Stupidly High and Three Times When Stupidly Low."

"There Is An Extensive Literature About the Predictability of Long-Term Stock Returns. There Is an Extensive Literature About Short-Term Market Timing. My Question Is About Long-Term Market Timing. The Literature Seems Slim."

"For Years, the Investment Industry Has Tried to Scare Clients Into Staying Fully Invested in the Stock Market at All Times, No Matter How High Stocks Go. It's Hooey. They're Leaving Out More Than Half the Story."

"There Are Time-Periods Where Stocks Are a Terrible Addition to That Portfolio. Yet Inexplicably, We As Planners STILL tend to Suggest That It Is 'Risky' to Not Own Stocks When in Reality the Only Risk Is to Our Business."

"There Is a Growing Behavioral Economics Movement, But It So Far Has Had Limited Impact. Economists Are Not Fond of the Softness and Imprecision of Psychology. These Notions Are Considered Vaguely Unprofessional and Flaky."

"I Was Hooked on the Idea of [Passive] Index Indexing, But Something Inside Made Me Wonder "Too Good to Be True?" and "What's the Downside?" I Happened on to Your Site and Valuation-Informed Indexing Seems to Make Sense."

"Rob's Da Man! Never in the History of the Diehards Forum Has One Poster, Always Making Civil and Well Thought-Out Posts, Managed to Irritate So Many Without Anyone Being Able to Articulate a Good Reason As to Why."

"Rob Bennett: Some People Disagree With Him, and He Rubs a Lot of People the Wrong Way. But He Has Interesting Ideas About Valuation-Informed Indexing, and He Delves Into a Lot of What Makes a Successful Investing Strategy."

"The Return Predictor Is Based upon the Principle that Over the Long Term, Stock Market Prices Will Reflect the Ten-Years Earnings Growth of the Underlying Companies. Prices Return to a Common Growth Pattern."

"You Go About It in a Manner that is Catastrophically Unproductive by Adding Missionary Zeal that Inflates Your Importance and Demeans Others. The Whole Idea That There is a New School of Safe Withdrawal Rates Reeks of Personal Aggrandizement."

“What Warren Buffett Did Was Essentially Quite Close to What Rob Bennett Has Written. Buffett Has in Fact Been Cleverly Incorporating Long-Term Market Timing Based on Valuation of the Market in His Allocation of Money to Stocks.”

"You've Got to Say One Thing for Rob. He Has NEVER Lowered Himself to Ad Hominen Attacks -- Subliminal or Otherwise -- on Any Other Person on This Board. Not Once. Ever. At Least Give Him Credit for That."

"Mr. Bennett, You Are Spot on About Integrating Some Type of Valuation Filter to One's Stock Allocation. Astute Investors Have Incorporated Some Type of 'Valuation Timing' Into Their Investment Decisions Since the Beginning of Time."

"There Is Nothing More Doubtful of Success Than a New System. The Initiator Has the Enmity of All Who Profit By Preservation of the Old Institution and Merely Lukewarm Defenders in Those Who Gain By the New One."

"Difficult Subjects Can Be Explained to the Most Slow-Witted Man If He Has Not Formed Any Idea of Them. But the Simplest Thing Cannot Be Made Clear to the Most Intelligent Man If He Believes He Knows Already What Is Laid Before Him."

"I Certainly Have Seen the Academic Profession Squelching Unfashionable ideas and Have Often Been on the Wrong Side of It. Kuhn Shows How Most Pathbreaking Scientific Ideas Are Rejected at First, Usually for Decades.”

"Rob Bennett Was an Early Pioneer in 3rd Generation Modeling by Advocating (Through Various Online Forums) that Withdrawal Rates Must Be Adjusted for Market Valuations Consistent with Research by Campbell and Shiller."

"Rob Is an Enigma in the Personal Finance World. He Has Interesting Theories on Investing Based on Market Valuations. But He Weaves a Tale Which Makes the Stories of Alexander Litvinenko & Gareth Williams Seem Tame by Comparison."

"I Have Read Everything I Can About Valuation-Informed Indexing. Buy-and-Hold Is Extremely Problematic. I Respect the Passion, Hard Work and Research That You Have Put Into This Very Important Issue. Your Work Has Huge Value."

"The Amount of Return You Can Expect From a Diversified Equity Portfolio Is Inversely Correlated to the Market Valuation at the Start of the Holding Period. It Is One of the Most Robust Statistical Relationships in Modern Finance."

"I've Had Similar Experiences. I Know of Two Young Professors Who Wanted to Do Research on Fundamental Index and Reported to Me That Their Colleagues Advised Them That This Line of Research Could Derail Their Career Prospects."

"As with Drug Studies Funded by Drug Companies, It Would Be Churlish to Suppose that the Chicago School of Business Was in the Bag. But It Would Also Be Idealistic to Assume That There Was No Funding Bias at All."

"This Sort of Intimidation Is Not Acceptable. The Cigarette and Pharmaceutical Industries Found Research Supporting Their Products By Funding It. But That Was Big Money Supporting Outcomes, Not Dissuading Others."

"The Situation [Referring to the Intimidation Tactics Used to Silence Academic Researcher Wade Pfau's Reporting of the Dangers of Buy-and-Hold Investing Strategies] Seems Well Below Any Professional and Academic Acceptable Standards."

"It Is Obvious that Rob, in Attempting to Identify New Safe Withdrawal Rate Strategies...Is Goring Your Ox. If Rob Improves on [the] Safe Withdrawal Rate Methodology, the Implication Is Clear: You Are All, Metaphorically, Out of Business."

"Naturally, I Am Finding That Valuation-Informed Indexing Can Allow You to Reach a Wealth Target With a Lower Saving Rate and to Use a Higher Withdrawal Rate in Retirement Than You Could With a Fixed Allocation."

"A Careful Examination of Past Returns Can Establish Some Probabilities About the Prospective Parameters of Return, Offering Intelligent Investors a Basis for Rational Expectations About Future Returns."

"How Can It Be That One-Year Returns Are So Apparantly Random and Yet Ten-Year Returns Are Mostly Forecastable? In Looking at One-Year Returns, One Sees a Lot of Noise. But Over Longer Time Intervals the Noise Effectively Averages Out and Is Less Important."

"The Notion That Rich Valuations Will Not Be Followed By Sub-Par Long-Term Returns Is a Speculative Idea That Runs Counter to All Historical Evidence. It Is an Iron Law of Finance That Valuations Drive Long-Term Returns."

"It's January and the Temperature Is Below Freezing. If You Asked Me Whether It Will be Warmer or Cooler Next Tuesday, I Would Be Unable to Say. However, If You Asked Me What Temperature to Expect on April 9, I Could Predict "Warmer Than Today" and Almost Surely Be Right."

"If the Response Is "Who Knew?", It Won't Be Much Comfort for Retirees in the Employment Line at Wal-Mart. This is Especially True Since a Rational Understanding of History and the Drivers of Longer-Term Stock Returns Can Help Retirees To Avoid That Surprise."

"New of the Demise of the Random Walk Has Only Very Slowly Spread, In Part Because Its Overthrow Came as a Shock. If the Random Walk Hypothesis Were Correct, the Most Likely Return Would Be the Historic Average Return. The Evidence, However, Is Strongly Against This."

"I Don't Care If You Do or Don't Believe That the Market Will Behave Similarly in the Future As It Has in the Past. Either Way, This [The Stock-Return Predictor] Is an Excellent Way to Understand What the Market Has Done In the Past."

"It Really Is a Shame and Indefensible That So Many Feel the Need to Jump Into It With No Interest of Posting on the Topic But Just to Disrupt. Are You That Insecure? Some on the Forum Have an Interest in This Topic. If You Don't, Stay Out!"

"Irrational Behavior Does Follow Patterns. But How Many Experts in Behavioral Finance Believe That Such Knowledge Can Be Used to Predict Markets? Basically, None. Your Model Cannot Attain the Level of Predictive Value You Claim."

"The Safe Withdrawal Rate Studies Are Based on History. This [The Retirement Risk Evaluator] Shows, Based on the Same History, What the Probabilities Are for the Future at Various Starting Points. If the First Has Value, Then Surely This Does Too."

"There Are Hundreds of People Who Contributed to This. This Calculator [The Stock-Return Predictor] Demonstrates in a Compelling Way the Power of This New Internet Discussion-Board Communications Medium."

"A P/E10 of'26' Is Bad. Now Look at the 30-Year Return Predicted by the Calculator -- 5.4 Percent Real. That's Not Bad. There Are All Sorts of Strategic Implications That Follow From Understanding That Stocks Provide Different Sorts of Returns Over Different Sorts of Time-Periods."

"I Would Never Invest in Anything Without Having Any Idea What the Expected Return Is. For Instance, I Would Not Walk Into a Bank And Say "I'll Take One Certificate of Deposit, Please" WIthout Asking What Rate They Are Offering."

"I've Seen Things Said on Investing Boards That I Have Never Heard Said in Discussions of Any Non-Investing Topic. The Question of Whether Valuations Affect Long-Term Returns Is a Topic That Causes People More Emotional Angst Than Does Abortion or Impeachment Proceedings or the War in Iraq."

"It's Not Possible For Those Who Have Come to Believe That Stocks Are Always Best to Accept that Valuations Matter. The Two Beliefs Are Mutually Exclusive. If Valuations Matter, There Is Obviously Some Valuation Level At Which Stocks Are Not Best. The Two Paradigms Cannot Be Reconciled."

"Dear Rob -- I Just Became Aware of Your Past Research in September. Since Then, I've Read Archives From Many Discussion Boards and Websites, and I Always Find Your Writing to Be Very Interesting and Intriguing."

"I Think Rob Bennett Did Provide An Important Contribution in Terms of Describing a Way for P/E10 to Guide Asset Allocation for Long-Term Conservative Investors. I Also Think He Was Right on the Issue of Safe Withdrawal Rates."

"Because the Precise Timing of This Mean Reversion Is Not Known in Advance, Expecting the Result to Happen in the Short-Term Will Not Be Possible. But Long-Term Investors Who Can Be Patient Can Wait for This Mean Reversion and Will Eventually Come Out Ahead."

"Your Work Is at Odds with the Ethos of the Board -- Here the Theme is John Bogle's Philosophy, Which Eschews Market Timing. This Board Came Into Existence to ESCAPE One Individual, the Very Individual With Whom You Have Openly Aligned Yourself."

"Why Is It Such an Odious Violation of the Tenets of Bogleheadism to Explore Whether Someone Who Has Enough Patience Might Be Able to Benefit from the Transitory Nature of Speculative Returns (the Idea That the P/E Ratio Eventually Ends Up Where It Started)?"

"Let Me Explain Why I Posted About This Here. Valuation-Informed Indexing Has Had Critics for Years. But Until Norbert Did It In 2008, Nobody Seemed to Have Provided a Serious Investigation of It. I Couldn't Understand Why. That Bothered Me."

"If You Really Don't Like Market Timing in Any and All Forms, You May Not See Any Point in an Empirical Investigation. You View Me as One of a Long Line of Hucksters Trying to Sell You Some Snake Oil. I Don't Want to Be Such a Person."

"Having a Completely Ineleastic Demand for Equities Is a Bit Bonkers. No One Acts That Way with Life's Other Important Commodities. Campbell Advocates a Linear Valuations-Based Strategy so That You Wouldn't Be Making Big Changes. This Would Be Like Rebalancing But More Flexible."

"The Whole Idea of Valuation-Informed Indexing Belongs to You. Do You Mind if I call the Paper 'Valuation-Informed Indexing'? I Would Give You Credit. I Have Been Toying With the Idea of Sending the Paper to the Journal of Finance, Which Is the Most Prestigious Journal in Academic Finance."

"I Definitely Need to Cite You as the Founder of Valuation-Informed Indexing, As I Have Not Found Anyone Else Who Can Lay Claim to That. Shiller Pointed Out the Predictive Power of P/E10 But Never Discussed How to Incorporate It Into Asset Allocation, As Far As I Know."

"I Tested a Wide Variety of Assumptions About Asset Allocation, Valuation-Based Decision Rules, Whether the Period Is 10, 20, 30 or 40 Years, and Lump-Sum vs. Dollar-Cost Averaging To Show That the Results Are Quite Robust to Changes In Any of These Assumptions."

"I Wrote Up the Programs to Test Your Valuation-Informed Indexing Strategies Against Buy-and-Hold and I Am Quite Excited. You Say in the RobCast That VII Should Beat Buy-and-Hold About 90 Percent of the Time. I Am Getting Results That Support This."

"Never Underestimate the Power of a Dominant Academic Idea to Choke Off Competing Ideas, and Never Underestimate the Unwillingness of Academics to Change Their Views in the Face of Evidence. They Have Decades of Their Research and Academic Standing to Defend."

"Since They Did Not Diagnose the Disease, There Is Little Popular Confidence That They Know the Cure. What If Economics Is, Actually, At the Same Level as Medicine Was When Doctors Still Believed in the Application of Leeches?"

"I Love the Humans Dearly (the Title of the Book I Am Writing Is Investing for Humans: How to Get What Works on Paper to Work in Real Life) But They Can Be a Trial at Times. Hey! Helping the Humans Learn What It Takes to Invest Effectively Is Not All That Different From Being Married!

"Wow, I Did Not Realize You Had Achieved This Much Success and Had Many Devoted Believers/Followers. That’s Great, Then Ignore the Opposition. It Is Great to Have Opposition: That Means You Are Doing Something Right."

"I Do NOT Believe I Know It All. I Believe That Shiller Discovered Something Very Important and It Appalls Me That More People Are Not Exploring the Implications of His Findings. My Aim Is To Launch a National Debate."

"I LOVE Everything About Buy-and-Hold Other Than the Failure to Encourage Investors to Take Price Into Consideration When Setting Their Stock Allocations. That's a Mistake That Was Made Because Shiller’s Research Was Not Available at the Time The Strategy Was Being Developed."

"Valuation-Informed Indexing Sounds Like a Real Thing. If It Is and I Can Thoroughly Understand It, Then It Will End Up In My Classrooms and in My Students' Minds (Of Course, With References to You and Wade)."

"As a Fan of Thomas Kuhn's The Structure of Scientific Revolutions, I Know That Progress Can Be Frustratingly Slow and What Is Typically Needed Is Either a Crisis or the Ascent of a New Generation of Scientists Who Did Not Build Their Careers on the Old Models and Theories."

"Rob Gets Himself So Worked Up Over What Someone Else Is Doing With Their Own Money and Not Bothering Rob in the Least. As Long As They Aren't Knocking on Your Basement Door, What Do You Care? They Are Happy and Content. Leave Well Enough Alone and Focus on Your Own Account."

"I've Been on Forum Since the BBS Days and I Think Rob is Special. He Could Be an Internet Meme If He Put Some Effort Into It. Someday, He Will Realize That the Only Thing He's Good At Is Being an Epic Loser. He Just Needs to Embrace That Idea and Run With It. Watch Out, LOLCats, Here Comes Pathetic Guy!"

"You Guys [the Greaney Goons] Are the Same Jokers Who Have Done This Before, Sparring with Rob Over Nonsensical Issues On This Site and Others, Leveling Personal Attacks, and You Don't Even Use Real Names! Rob Is Entitled to His Opinion, But the Fact That You Challenge Every Jot and Tittle of What He Says Makes It Clear You Have An Unholy Agenda. Please Take It Elsehwere."

"Rob, Take This As Friendly Advice. You're a Smart and Articulate Guy and You Could Be Making Valuable Contributions to This Discussion. I've Dealt with the Mentally Ill Before and I've Found That They Sometimes Can Be Reasonable If Gently Redirected."

"I’m a Numbers Guy. And I Believe I Understand Rob’s Thesis, that Future Returns, Over the Next Decade, Have a Tight Inverse Correlation to the PE10 for the Starting Point. Remember, Correlation Doesn’t Need to be 100%, Only That There’s a Bell Curve of Potential Outcomes that Shift Meaningfully Based on the Input."

"I Have had Academic Researchers Tell Me That They Dream of the Day When They Will be Able to do Honest Research Once Again. I Have had Investment Advisors Tell me That They Dream of the Day When They Will be Able to Give Honest Investing Advice Again."

"Let’s Call a Spade a Spade, Shall We? Wade Pfau Stole Your Research and Put His Name on it, Throwing You Just a Tiny Crumb of Acknowledgement to Ward Off a Lawsuit. He’s Profiting Handsomely By His Theft, Leading a Charmed Life, Widely Published, Widely Respected. While Rob Bennett Continues to Toil in Total Obscurity. It’s So Incredibly Unfair, I Think If It Happened to Me, It Could Actually Drive Me Insane."

Juicy Excerpt: The stock price that applies on any given day is a COMBINATION of short-term and long-term effects. If the theory behind the VII model is correct, the short-term effects should always be pulling the data in the direction of showing no correlation and the long-term effects should always be pulling the data in the direction of showing a perfect correlation. The combined effect of the two contrary forces should be data showing a strong but imperfect correlation and one that grows as the time-period lengthens.

That is precisely what we see when we look at the 140 years of data.

If the VII model properly explains how stock investing works, we should not be expecting to see a perfect correlation when we compare the P/E10 value that applies on the day of a purchase and the long-term return produced in the years following that purchase. We should be expecting to see a strong but less than perfect correlation. That’s the correlation that appears on our computer screens when we generate graphics showing to us in pictures the story that the historical stock-return data has been trying to tell us for 140 years now.

I've posted Entry #266 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called How a Visit to the Dentist Is Like a Visit to an Investing Analyst.
Juicy Excerpt: I was sitting there getting my teeth cleaned and feeling guilty about how long I had put it off when it hit me -- "This is just like investing!" It's all emotion. There have been a lot of advances in dentistry in recent decades. There is a lot of technology that can be put to use to help us keep our…

I've posted Entry #285 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The "Why" Behind Michael Kitces' Strange Finding That High Valuations Point to Low Returns Only for a Time and Then to Higher-Than-Normal Returns.
Juicy Excerpt: It’s investor emotion that is the primary cause of stock price changes, not economic realities. That’s the Shiller breakthrough. That changes everything. The strange pattern described in the Kitces article makes sense…

I've posted Entry #66 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Why Is the Valuations Topic So Darn Controversial?
Juicy Excerpt: If you read the comment that I put to the blog post, you will see that I believe that our discovery in 1981 that valuations affect long-term returns is akin to mankind’s discovery of how to harness electricity to enrich our lives in hundreds of different ways.
Imagine that the discovery of how to make use of…

I've posted Entry #142 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Bad Retirement Studies Are Like Dirty Restrooms -- They Are a Sign of More Bad Stuff That You Cannot See.
Juicy Excerpt: Most of the experts use the claim that their strategies are backed by research as a marketing gimmick. it sounds good to say that advice is rooted in research. It makes investors feel comfortable to hear those kinds of promises. But honoring the promises would tie the…

I've posted Entry #82 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Five Most Important Advances in Our Understanding of How Stock Investing Works.
Juicy Excerpt: In the days when we thought that the market was efficient, Buy-and-Hold strategies (staying at the same stock allocation at all times) made all the sense in the world. If stock returns cannot be predicted, stocks are equally risky at all times. Thus, it makes sense for an investor to…

I've posted Entry # 87 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Fair-Value P/E10 Number Is Somewhere Between 14 and 16.
Juicy Excerpt: Yale Economics Professor Robert Shiller, the grandfather of the Valuation-Informed Indexing model, puts it at 16. There’s a good case that can be made for that number. But “16” is not the only reasonable answer to the question “What is the fair-value P/E10 number?”
John Walter Russell, former owner…

I've posted Entry #65 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called To Stabilize the Economy, We Need to Stabilize Stock Valuations.
Juicy Excerpt: The first step onto a better path is acknowledging the holes in Fama’s Efficient Market Hypothesis that were discovered by Shiller 30 years ago. It’s not economic developments that cause the sorts of insane stock prices we saw in the late 1990s. it’s the sorts of stock prices we saw in the late 1990s…

I've posted Entry #309 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Value Proposition of Stocks Changes By a Factor of Three As Valuations Move from Low to High Levels.
Juicy Excerpt: Please understand that it is Rob Bennett saying these things about Wade Pau’s graphic, not Wade himself. I believe that, if you asked him privately, Wade would agree with the thrust of what I am saying. We exchanged hundreds of e-mails during the 16 months that we…

I've posted Entry #281 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Twelve Claims Made in Irrational Exuberance That Should Be Explored in Book-Length Examinations -- Part One.
Juicy Excerpt: “It is a serious mistake for public figures to acquiesce in the stock market valuations we have seen recently, to remain silent about the implications of such high valuations, and to leave all commentary to the market analysts…. The valuation of the stock…

I've posted Entry #31 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called You Don't Have to Sacrifice Return to Lower Your Risk.
Juicy Excerpt: Stock risk and stock return move in opposite directions. It is when the risk of losses is least that the potential for good returns is greatest. It is when the risk of losses is greatest that the potential for good returns is the lowest. Stock risk and stock return are not correlated but are inversely…

I've posted Entry #335 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called There Would Be Great Benefits to Valuation-Informed Indexing Even If Market Timing Did Not Work.
Juicy Excerpt: Buy-and-Holders are working a sleight of hand. People look at the low rates of return provided by Treasuries and they conclude that market timing is not an appealing idea. There are ways around the problems stressed by the Buy-and-Holders but most investors are sufficiently…

I've posted Entry #357 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called It Doesn't Matter Much How Long It Takes for Prices to Return to Fair-Value Levels.
Juicy Excerpt: The annualized real return for stocks from January 2000 through December 2016 was 2.27 percent. We are today living through a time-period much like the one that my Buy-and-Hold friend described as a possibility a good number of years back. Investors are not earning enough to finance…

I've posted Entry #22 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Low Stock Returns Need Not Hurt You As An Investor.
Juicy Excerpt: Investors seeking high returns are not required to take on high levels of risk, under the Valuation-Informed Indexing Model. So there is no penalty associated with going with a low stock allocation or even a zero stock allocation for a time. Valuation-Informed Indexers have opportunities available to them that are not…

I've posted Entry #159 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Same P/E10 Level Can Mean Different Things in Different Circumstances.
Juicy Excerpt: In the late 1980s and early 1990s, we were on our way from a P/E10 of 8 to a P/E10 of 44. We certainly had no way of knowing at the time that we would end up at 44. We had never gone that high before. But we knew that the P/E10 level was likely to continue going up after hitting 18 even if for a…

I have posted Entry #194 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Price Volatility Is Optional.
Juicy Excerpt: The graphic shows results from 1996 for an investor going with a 100 percent stock allocation and for an investor going with Treasury bills for that entire time period. The former investor was obviously taking on FAR more risk since he was invested in stocks rather than Treasury bills. And the former investor experienced FAR more…

I've posted Entry #301 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Most Investing Strategies Perform Differently Over Different Time-Periods.
Juicy Excerpt: Another important feature of the calculator is that it reports results at six time-periods: (1) five years; (2) ten years; (3) fifteen years; (4) twenty years; (5) twenty-five years; and (6) thirty years. Too much of today’s investing commentary is rooted in a belief that one strategy is…

I've posted Entry #249 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Why We're Reluctant to Take Advantage of What We Learned from Shiller's Research.
Juicy Excerpt: The most powerful demonstration of the phenomenon is the famous research that was done by Solomon Asch in the 1950s. Asch arranged for groups of five to seven confederates to meet in a room with a single real experiment subject and answer questions about the lengths of lines on cards…

I've posted Entry #259 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Return Predictions Are Implicit in All Investing Advice.
Juicy Excerpt: I compared what investing analysts do with that doctors do. A doctor cannot give precise predictions of how long it will take for a disease to kill his or her patient. Yet doctors still make such predictions. They say: "You have six months to live unless you undergo this operation." Why? Don't they worry that it is…

I've posted Entry #166 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Last Week's Nobel Prize Award Is an Acknowledgment That We Do Not Today Know How Stock Investing Works.
Juicy Excerpt: It was a diplomatic act to award the prize to both men. It was not a logically consistent act to do so. One of the two men is right about how stock investing works. One of the two men is wrong about how stock investing works.
By having the two men share the award,…

I've posted Entry #59 for my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Indexing Changed Everything.
Juicy Excerpt: People expect and accept volatility in index fund prices only because index funds are a type of stock investment and the earlier types all produced volatile prices. But index funds are different in a fundamental way. With index funds, you know what the return is going to be before you buy. So there is no reason why index fund prices should be…

I have posted Entry #294 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller Was Warned Not to Tell the Truth About the Stock Market -- And We All Heard the Message.
Juicy Excerpt: Robert Shiller says in his book Irrational Exuberance that: “On several occasions I have discovered firsthand the pressure on public prognosticators to deliver positive statements about the market. Once, just before going on national television, the anchor looked me…

I've posted Entry #363 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Some Moderate Thoughts About Safe Withdrawal Rates.
Juicy Excerpt: So lowering the stock allocation and increasing the TIPS allocation can increase the safe-withdrawal-rate dramatically. Many investors would not feel comfortable going with a 100 percent TIPS allocation even in the circumstances that applied in early 2000. But even a shift to a 50 percent TIPS allocation would have…

I've posted Entry #56 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Bernie Madoff Is Us.
Juicy Excerpt: There is always some fraud in the market. But so long as prices remain reasonable. it is unlikely that there would be sufficient fraud to cause serious problems for indexers. But times in which valuations soar are times when public scrutiny of what is going on in the market is spare (how else could valuations get out of hand?). A moderate P/E10 level…

I've posted Entry #85 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Wall Street Journal Story That Didn't Bark.
Juicy Excerpt: I’ve been telling people about the other half of the story for 10 years now. People often tell me that everything I say about investing makes perfect sense but that they just cannot bring themselves to go along with the ideas I put forward because the “experts” tell a very different story. So I was excited to see this…

I've posted Entry #210 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller Is Weak re the How-To Aspects of Stock Investing.
Juicy Excerpt: The primary reason why people buy investing books is to learn what to do with their money. Irrational Exuberance is amazing on theory. But Shiller devoted only two paragraphs of his masterwork to the how-to questions.
Here is what he says: “So what should investors do now? The natural first step may be,…

I've posted Entry #299 to my weekly Valuation-Informed Indexing column at the Value Walk site, It's called Shiller Showed That Valuations Matter, the Return Predictor Shows How Much They Matter.
Juicy Excerpt: After two months. Larry called me and we talked for several hours about the good that this new investing model (rooted in Robert Shiller’s research) could do for the world. The following day he sent me an e-mail containing the words quoted above. Larry put Valuation-Informed…

I've posted Entry #235 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called 20 Dangerous Investing Myths -- Part One.
Juicy Excerpt: The Awarding of the Nobel Prize to Shiller Reflects His Great Influence in the Field. People obviously like and respect Shiller. But his practical influence on the strategies promoted by the big-name experts has been just about nil. I often ask Buy-and-Holders to tell me one way in which John Bogle has changed his investing…

I've posted Entry #164 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called If Widely Held Views About Smoking Can Change, Widely Held Views About Investing Can Change Too.
Juicy Excerpt: I don’t think anyone truly believed that smoking is good for your health. So, in a literal sense, no, no one believed the stupid advertisements.
But it is important to remember that it is not the purpose of an advertisement to persuade through logic. One of the…

I've posted Entry #131 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's titled Why My Claims About Buy-and-Hold Sound Strident.
Juicy Excerpt: Experts and researchers and article writers are like everybody else, they want to be liked. Investors want to believe that the phony pumped-up prices we see in bull markets are real because they are counting on those phony pumped-up prices to finance their retirements. So the experts and researchers and article writers…

I've posted Entry #278 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Our Investing Biases Are Particularly Dangerous Because They Are Time-Based Rather Than Phenomenon-Based.
Juicy Excerpt: The most important investing biases are time-based rather than phenomenon-based. That means that for long periods of time certain ideas are forgotten by almost the entire population. To tap into the other side of the story the investor would have to study historical…

I've posted Entry #145 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Financial Crisis and the Systematic Failure of Academic Economics.
Juicy Excerpt: “The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold. In our view, this lack of understanding is due to a misallocation of research efforts in economics.…

I've post Entry #2 to the Valuation-Informed Indexing column at the Value Walk site. It's called What If Everything You Thought You Knew About Stock Investing Turned Out to Be Wrong?
Juicy Excerpt: Web sites and radio shows and newspapers report the Dow and S&P numbers every day. How often do you hear the numbers reported adjusted for the effect of overvaluation? At the time when stocks were priced at three times fair value, the Dow was at about 12,000. Shouldn’t the news reports have…

I've posted Entry #355 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Buy-and-Hold Has Not Been a "Good Enough" Strategy Over the Years.
Juicy Excerpt: Say that we were trying to determine whether it is a good idea to smoke. Those seeking to make a case for smoking could point to millions of people who smoked and lived long, fruitful, exciting lives. That’s not an endorsement of smoking. It’s a showing that many people are so full of love that they…

I've posted Entry #360 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called There Is No Floor on Safe Withdrawal Rates.
Juicy Excerpt: There’s another factor that Kitces ignores in his claim that the 4 percent figure is a floor. It’s not only valuations that determine the safe withdrawal rate. The other big factor is the return sequence that applies. Two different return sequences that produce the same long-term return do not necessarily produce the same…

I've posted Entry #36 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Micro Efficiency Is Real, Macro Efficiency Is a Mirage.
Juicy Excerpt: The entire historical record argues against market efficiency. The case is so strong that it is difficult to imagine what it is that the millions who believe in market efficiency (this group includes many people with a strong knowledge of the literature discrediting the efficiency concept) are thinking.
The best…

I've posted Entry #47 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Buy-and-Hold Is Dead! Long Live Buy-and-Hold!
Juicy Excerpt: I can testify on Scott’s behalf re that one. I’ve been reporting on the accurate numbers at discussion boards and blogs for nine years now and my experience is that the accurate numbers are information that lots of people very, very, very, very, very, very, very much do not want to hear.
We hate knowing the realities…

I've posted Entry #70 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Do Demographic Changes Affect Stock Returns?
Juicy Excerpt: Demand for stocks doesn’t matter, according to the VII Model. Demand of course has a temporary effect. When lots of investors want to own lots of stocks, that pushes prices upward. But it is a key precept of this model that, while prices often do not reflect the economic realities in the short term, they always do in the long…

I've posted Entry #176 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Valuation-Informed Indexers Don't Have Good or Bad Years -- We Measure Success Over 10-Year Time-Periods.
Juicy Excerpt: If you went through the 140 years of historical return data to determine how many years Buy-and-Holders did better for the year and how many years Valuation-Informed Indexers did better for the year, the Buy-and-Holders would be shown to have more victories. The…

I've posted Entry #291 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Bull Markets Increase the Odds of Two Outcomes -- Very High Return Years and Very Low Return Years.
Juicy Excerpt: There were a small number of investing analysts who advised their clients or readers to lower their stock allocations in early 1996. Imagine what their clients thought of them when a return of 19 percent was delivered for 1996. And then a return of 31 percent was delivered…

I've posted Entry #78 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Using Accurate Safe Withdrawal Rate Numbers Helps Us Understand Stock Investing Risk.
Juicy Excerpt: Say that the SWR is always 4 percent. Does that sound like a low number or a high number?
It is a remarkably low number. The SWR calculations assume that the portfolio may be reduced to zero over the 30-year time-period. Thus, an asset class providing a zero return for 30 years…

I've posted Entry #320 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Effective Financial Planning Becomes Impossible During Both Bull and Bear Markets.
Juicy Excerpt: No, you don’t have to give back the things you bought with phony bull market gains. But you wouldn’t have bought most of those things at the prices offered had you known that you were not going to be able to retain all of your bull market gains. So you made bad purchasing decisions and…

I've posted Entry #205 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called An Easy and Convincing Way to Reconcile the Ideas of Shiller and Fama.
Juicy Excerpt: There are two possible explanations for why short-term timing does not work.
One is the one that Fama advanced. It could be that the market is efficient. That is, that all information bits affecting price are immediately incorporated into market prices. If this were so, all of the principles of the…

I've posted Entry #178 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's callled I No Longer Believe That Buy-and-Holders Eventually Catch Up With Valuation-Informed Indexers.
Juicy Excerpt: I now believe that one of the factors that makes the 30-year and 60-year numbers look good is that they are the product of many years of compounding. What we may be overlooking is that even small differences in return percentages can translate into large differences in…

I've posted Entry #114 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called There Are 12 Trillion Reasons Why Buy-and-Hold Became So Popular.
Juicy Excerpt: We live in a society in which all sorts of ideas compete with each other for the hearts and minds of the people in a position to determine which ideas come to dominate and which come to be viewed as failures. I don’t like it that Valuation-Informed Indexing can properly be termed a failure in marketing…

I've posted Entry #35 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Is Valuation-Informed Indexing Something New?
Juicy Excerpt: There are two major criticisms directed at me by my detractors.
One is that the stuff I say about investing is so crazy out-there that I am obviously in need of meds and my investing advice is so dangerous that I should be banned from the internet before I do more damage.
The second criticism is that the stuff I say is so…

I've posted Entry #198 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Appeal of the Valuation-Informed Indexing Story to an Enterprising Journalist.
Juicy Excerpt: This is a bigger story than Watergate. If Shiller is right and Fama is wrong, it was the heavy promotion of Buy-and-Hold that caused the economic crisis. Plus, there are millions of middle-class investors who are going to suffer failed retirements in days to come and the government is…

I've posted Entry #223 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Most Investors Follow Modified Versions of Buy-and-Hold or Valuation-Informed Indexing.
Juicy Excerpt: I expect that another crash might cause the percentage of the population following a modified version of Valuation-Informed Indexing to increase from 15 percent to 30 percent. And we might see a change in the percentage following a modified version of Buy-and-Hold drop from 60 percent…

I've posted Entry #256 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called There Are Rare Circumstances in Which Short-Term Predictions of Price Changes Can and Should Be Made.
Juicy Excerpt: There are two reasons why I predict that we will see a crash by the end of 2016 rather than by the end of 2018 (the far safer prediction).
One reason is that a lot of my critics insist that I offer claims that can be verified as proof that the Valuation-Informed…

I've posted Entry #30 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Rebalancing Hurts As Often As it Helps.
Juicy Excerpt: A price jump of 20 percent would have caused the investor’s stock allocation to go higher still. Rebalancing would have brought it back to 70 percent stocks. Rebalancing in this case would have pulled the allocation a bit in the right direction. So it would have been a plus.
But what if prices fell 20 percent instead? In that…

I've posted Entry #49 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Paradigm Busting.
Juicy Excerpt: Valuation-Informed Indexing would be more popular if investors didn’t feel that they need to choose either VII or Buy-and-Hold. People would feel more comfortable taking a compromise choice somewhere between the two extremes. Unfortunately, no compromise is intellectually viable.
If the market is efficient, the Buy-and-Holders are right and the…

I've posted Entry #209 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called No P/E10 Value Signifies the Same Thing At All Times.
Juicy Excerpt: It’s also important to keep in mind that P/E10 values do not pop up randomly. There is a pattern that has applied for the entire 140 years of stock market history. Prices start out low. Then they rise steadily for perhaps 20 years. Then they fall sharply and remain low for perhaps 10 years. Prices behave in that…

I've posted Entry #130 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Buy-and-Hold Can Give Good Results for 30 Years and Still Not Work As An Investing Strategy.
Juicy Excerpt: The entire benefit of using academic research to guide our strategies is to help us to go beyond subjective impressions, which are heavily influenced by recent price trends. Research gives us something objective to look at. We should make an effort to rise above our knowledge of…

I've posted Entry #93 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's titled Why the Economic Recovery Is Doomed.
Juicy Excerpt: If we all came to accept that we caused the crisis with our bad behavior in the late 1990s, we could come to terms with what has happened and put it behind us. That’s the test. That’s what we should be looking for when we aim to assess whether a lasting economic recovery is on its way or not.
It’s not happening.
I am on the…

I've posted Entry #344 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called If Shiller Is Right, Buy-and-Holders Should Be Feeling Intensely Emotional Today.
Juicy Excerpt: Some would say that investors were more emotional in the wake of the 2008 crash than they were in early 2000, when the P/E10 value was much higher. I view that as a surface perception. If you interviewed both sets of investors, you would have heard more expressions of worry from the…

I've posted Entry #257 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called It's Not Possible That Valuations Matter Only at the Margins.
Juicy Excerpt: Stocks don't suddenly become dangerous when the P/E10 value hits 27. Stocks are virtually risk-free when the P/E10 value is 15. Then they become more risky at 18. And more risky at 21. And more risky at 24. And more risky at 27.
Unfortunately, the growing risk is a silent growing risk. Stocks are far more…

I've posted Entry #217 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller Believes in Short-Term Timing.
Juicy Excerpt: The article goes on to point out that the P/E10 level is now at the fourth highest point it has ever reached in the history of the U.S. market and that the three higher peaks all produced stock crashes. But it reports that Shiller’s belief is that today’s P/E10 level “might be high relative to history but how do we know that…

I've posted Entry #152 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Buy-and-Hold and Valuation-Informed Indexing Cannot Co-Exist.
Juicy Excerpt: We all learn more when we have available to us smart people who challenge our thinking. I would not be happy on a discussion board populated solely by Valuation-Informed Indexers. I of course like it when people say that the strategies that I advocate possess merit. But I learn more when I am challenged than I…

I've posted Entry #220 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Our Emotional Attachment to Long-Believed Investing "Truths" Causes Us to Tune Out a Mountain of Evidence.
Juicy Excerpt: Klein writes: “One thing that comes clear when you spend much time reading inside the Gamergate community is the feeling of being misunderstood — and, for that matter, smeared — is very, very real. If you’re reading about Gamergate on the left, virtually all…

I've posted column entry #24 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Does Shiller Endorse Valuation-Informed Indexing?
Juicy Excerpt: Shiller has said surprisingly little about how to implement his investing ideas. His focus has been on doing research and on setting forth a new theory of how stockinvestingworks (the subtitle of his book is: “The National Bestseller That Revolutionized the Way We Think About the Stock Market.”). The idea behind…

I've posted Entry #216 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Did Shiller Change Anything?
Juicy Excerpt: But how much has the conventional advice on how to invest in stocks changed as a result of the “revolutionary” research that Shiller published in 1981 (and that has been confirmed many times in the three decades since).
Not at all.
If you are able to identify any changes, I’d be grateful if you would point me to them. My sense is…

I've posted Column Entry #37 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Stock Prices Are Not a Random Walk -- Here's Proof!
Juicy Excerpt: Some people believe that stock prices follow the pattern of a random walk. Some do not. Let’s not argue. We live in the age of the internet. Let’s check it…

I've posted Entry #3 to the Valuation-Informed Indexing column at the Value Walk site. It's called The Curious Case of the Market Price That Is Not the True Market Price.
Juicy Excerpt: Eugene Fama almost got it right. Fama believed that, because it is in each investor’s interest to exploit any anomalies in market pricing, the overall market was sure always to get prices at least roughly right. That makes sense. Fama’s mistake was in failing to stress to the investors who comprise the…

I've posted Entry #361 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Investing Is In Some Important Ways a Community Act Rather Than an Individual Act.
Juicy Excerpt: There’s a funny scene in an episode of Mad Men that reminds me of an unfortunate phenomenon that applies among the stock investors of today. Don Draper and his wife and two kids are enjoying a picnic at a public park. When it is time to get back in the car and drive home, they pick up…

I've posted Entry #308 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called It's Worth Examining How Numerous Allocation Options Are Likely to Perform Over Numerous Time-Periods.
Juicy Excerpt: I started writing about safe withdrawal rates in May 2002. At that time, it was common practice among Buy-and-Holders to assume that smart retirees would employ a portfolio allocation of 80 percent or so. The conventional wisdom of the day was that stocks had been…

I've posted Entry #282 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Twelve Claims Made in Irrational Exuberance That Should Be Explored in Book-Length Examinations -- Part Two.
Juicy Excerpt: “If over some interval in the first decade or so of the 21st Century the U.S. market is going to follow an uneven course down, as well it might — back, let us say, to its levels in the mid-1990s or even lower…the real losses could be comparable to the total…

I've posted Entry #255 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called How Developments Like the Greek Debt Crisis Affect Stock Prices.
Juicy Excerpt: Say that stocks are priced at two times fair value. There is only so much higher they can go. We cannot say when the market will fall, it might take a few years. But once prices hit two times fair value, we can say with a high degree of confidence that the odds favor a big price drop over a big price…

I've posted Entry #311 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Buy-and-Hold Stopped Being Science When It Was Not Corrected to Reflect Shiller's Findings on Valuations.
Juicy Excerpt: Silver points to the flaw in human nature that caused the downfall not only of those who dismissed Trump’s chances of winning the Republican nomination but of those who grew so emotionally attached to the Buy-and-Hold dogmas that they became incapable of…

I've posted Entry #5o to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called "Approximately True" Investing Advice Doesn't Cut It Anymore.
Juicy Excerpt: How are we going to hold back the crowds anxious to make a speedy transition from Buy-and-Hold to Valuation-Informed Indexing?
But wait.
There are no crowds! People hate Valuation-Informed Indexing. I am the concept’s leading promoter on the internet and it is more common for me to be greeted with bricks…

I've posted Entry #27 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Not One Study Supports the Claim that the Market is Efficient.
Juicy Excerpt: The idea that the market is efficient is an attempted explanation of the data, not itself a finding. The two are not the same thing. A research finding can be said to be the product of science. An attempted explanation of a research finding can never be anything more than subjective opinion until it is tested…

I've posted Entry #315 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called We Learn About Investing (and Everything Else) By Talking About It.
Juicy Excerpt: What’s missing is the second part of the learning experience. We read words about what Shiller showed in his research. We make his books bestsellers. We praise him. We even award him Nobel prizes. But we don’t talk over what Shiller showed. I am the world expert re this one; I am banned at over 20…

I've posted Entry #21 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called We've Been Driving in the Wrong Direction for 30 Years.
Juicy Excerpt: If the market is efficient, Buy-and-Hold is the best investing approach ever developed by the human mind. I have no problem saying that. It really is an objective approach. So, if the Buy-and-Holders got the fundamental question right, I think it makes sense to go with what they say about asset allocation and…

I've posted Entry #366 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Investors Who Lower Their Return Expectations At Times of High Valuations Should Lower Allocations Too.
Juicy Excerpt: Bogle stated on Page 33 of his book Common Sense on Mutual Funds that: “This analysis takes into account my conviction both that the performance of individual securities is unpredictable, and that the performance of portfolios of securities is unpredictable on any…

I've posted Entry #326 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Three Return Scenarios That Applied in the Wake of the 2008 Crash.
Juicy Excerpt: It’s not just the drop in their portfolio values that cause Buy-and-Holders to panic in the wake of price crashes. Another factor is their belief that price changes are caused by unforeseen economic developments. If one believes that price changes are caused by economic developments and prices fall…

I've posted Entry #207 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Rational and Irrational Investing Ideas Co-Exist.
Juicy Excerpt: People don’t respond with excitement when they learn that it is possible to reduce stock investing risk by 70 percent. They respond with worry. What if it doesn’t work? It’s been working for 140 years. What if you got something wrong? The paper passed peer-review and is subject to challenge to anyone who has access…

I've posted Entry #118 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called It's a Thin Line Between Love and Hate (of Stocks).
Juicy Excerpt: Stock price changes that are brought on by the logical analysis of economic developments are orderly.Things go up a little bit, things go down a little but. Things generally stay more or less the same. Wild price swings don’t evidence themselves in an efficient market.
‘They evidence themselves in the…

I've posted Entry # to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called P/E10 Permits Us to Quantify Investor Emotion.
Juicy Excerpt: Greenburg wrote: "Thank you so much, Robert Shiller. For all the illumination you have provided in housing, equities and markets generally. I've been a tremendous fan. And have even changed my tax law practice because of you (focusing not just on financial details but on the psychology of the clients as well)."
That's…

I've posted Entry #338 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Burden of Proof re Price Discipline Should Be on the Buy-and-Holders.
Juicy Excerpt: Shiller said (about 10 minutes into the video): “My attitude is — Why are we so interested in the efficient markets model? Because we haven’t seen any compelling evidence for it. It may be that we have trouble rejecting it. It depends on your model of human nature.”
There have been many…

I've posted Entry #129 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Safe Withdrawal Rate Scandal Continues.
Juicy Excerpt: Even professionals are still being taken in. There was a survey of financial planners performed not too long ago that showed that only one in three believe that it is necessary to consider valuations when determining how much a client needs to have in his portfolio to finance a safe retirement. These are people who charge money…

I've posted Entry #208 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Why I Write Only About Valuation-Informed Indexing.
Juicy Excerpt: In other fields, we learn new things and we move ahead. In the investing field, we learn new things and — we ignore the new things we have learned.
I believe that the reason why we do this is not that investing doesn’t matter but that it matters too much. We cannot bear to acknowledge having made big mistakes in…

I've posted Entry #135 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's titled My Response to the Seeking Alpha Article Saying P/E10 Doesn't Work.
Juicy Excerpt: I don’t agree with most of the points made in the article. But the appearance of the article is encouraging. I believe that we need to convert the entire world to Valuation-Informed Indexing. That won’t happen as a result of me posting articles praising the concept. It can only happen as the result of…

I've posted Entry #340 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Stock Market Is Cyclical But Not in the Way That You Think.
Juicy Excerpt: Stock prices do not play out in the pattern of a random walk in the long term. They do that only in the short term. In the long term, they play out in a hill-and-valley pattern. From a long-term perspective, it is not true that stocks go up and stocks go down. From a long-term perspective, high-priced stocks…

I've posted Entry #351 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The 4 Percent Rule Points Us to the Average Safe Withdrawal Rate.
Juicy Excerpt: The 4 percent rule is not the product of mere foolishness. It is the product of tough logic being applied to a fundamental…

I have posted Entry # 163 to my weekly Valuation-Informed Indexing column at the Value Walk site. It is called All of Today's Investment Advisors Need to Warn Their Clients That Their Advice May Be Wildly Off Base.
Juicy Excerpt: So the right way to handle things is to say: “I believe that the best allocation for someone in your circumstances is 80 percent but I have to add that there are good and smart people out there who believe just as strongly and with research every bit as serious…

I've posted Entry #354 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Risk Increases Steadily As Stock Valuations Rise.
Juicy Excerpt: I worry about valuations a great deal. I don’t worry about bubbles at all. In fact, I would be inclined to agree with Eugene Fama, who has said that he does not believe that bubbles exist. I think that’s right. I believe that the bubble phenomenon is mythical. Overvaluation exists. Overvaluation is a big deal. But…

I've posted Entry #192 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller Makes Some Dubious Calls in His Latest Interview.
Juicy Excerpt: But again I think Shiller goes too far with the humility that comes naturally to him. No one knows anything for sure. That much is certainly so. But the full reality here is that Shiller’s work has helped us to become far better able to predict economic developments than we were before we had access to his…

I've posted Entry #284 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Michael Kitces Writes an Article Showing That, in the Very Long Term, the Effect of Valuations Diminishes.
Juicy Excerpt: A number of years back, I founded a discussion board called “The Safe Withdrawal Rate Research Group.” John Walter Russell and I were at the time developing the five Valuation-Informed Indexing calculators that are today housed at my web site. John was producing…

I've posted Entry # 213 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Reader Comments at the New York Times Article on Shiller's Nobel Prize.
Juicy Excerpt: It strikes me as excessively cynical to conclude that financial payoffs are the primary problem. They are a problem, however. And they are a problem with broad political implications. Journalists should be looking into this aspect of the story. There is a Pulitzer waiting to be awarded to the…

I've posted Entry #375 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Stock Investors Are in the Process of Acquiring Self-Knowledge.
Juicy Excerpt: While I believe that the Get Rich Quick element of the Buy-and-Hold concept is a big part of its appeal, I don’t think it’s right to say that that is the only factor pushing millions of good and smart people toward a belief in the strategy. Millions believe that Buy-and-Hold is research-based regardless.…

I've posted Entry #253 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called What a Journalist Can Tell You About Stock Investing That an Expert Cannot.
Juicy Excerpt: But politeness is not the only virtue. Frankness is a virtue. We can make a mistake when we become so polite that we hold back from stating our views frankly. I see too much of the bad form of politeness evidencing itself in the investing realm. People want to get along with each other and they…

I've posted Entry #187 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Do Women Understand Investing Better Than Men?
Juicy Excerpt: It might be that we shouldn’t even refer to “valuations.” Whenever we talk about valuations, what we are really talking about is investor emotions. Why do you think it is that most in this field would rather we talk about high P/E10 values and low P/E10 values rather than fear and greed and hope and love and shame and…

I've posted Entry #11 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's titled What the Word "Overvaluation" Means.
Juicy Excerpt: Huge amounts of economic resources were misdirected because of the widespread confusion over the significance of massive stock overvaluation. Businesses selling high-priced cars, big houses, expensive vacations and other luxury goods earned higher profits than they would have earned had the American consumer possessed a better…

I've posted Entry #185 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called There's a Lot of Money to Be Made Promoting the Valuation-Informed Indexing Concept.
Juicy Excerpt: Once the dam breaks, people will see opportunities everywhere to do good while also doing well. Valuation-Informed Indexing totally rewrites the rulebook. We are going to need thousands of new books. We are going to need hundreds of new calculators. We are going to see new thought…

I've posted Entry #175 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller Places Too Much Emphasis on "Bubbles."
Juicy Excerpt: It’s a mistake to focus on bubbles because there really is nothing special about bubbles. Shiller’s breakthrough was not discovering bubbles. It was discovering that it is investor emotions rather than economic and political developments that set stock prices. This reality applies during bubbles. But it also applies at…

I've posted Entry #246 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called I Am Only 90 Percent Confident That My Investing Ideas Won't Ruin People's Lives.
Juicy Excerpt: I have posted over 200 full-length articles on investing at my web site. I have also recorded over 200 one-hour podcasts. I have developed five unique calculators that required about one year of development time each. I have posted nearly 500 column entries. I have produced hundred of guest…

I've posted Entry #95 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's titled We Need to Find Ways to Help Buy-and-Holders Save Face.
Juicy Excerpt: It’s not that the case for Valuation-Informed Indexing is not strong enough. It’s too strong! If Valuation-Informed Indexing only increased returns a small bit or diminished risk a small bit, the Buy-and-Holders would jump on it. Everyone wants to achieve higher returns while talking on less…

I've posted Entry #102 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called How Much Allocation Shifting Do You Have to Do to Be a Valuation-Informed Indexer?
Juicy Excerpt: The common theme to all the possibilities is that the investor is trying to keep his risk profile roughly stable at all times. There is no one right way to do that. Or, if there is, we are not today able to identify it. So we have to permit and even encourage a great deal of flexibility…

I've posted Entry #134 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Is the Lowest Possible Safe Withdrawal Rate 1.6 Percent or 2 Percent?
Juicy Excerpt: I have doubts about one of the numbers generated by the calculator. I was not the sole developer of the Risk Evaluator. I worked with John Walter Russell, who died in October of 2009. John and I had a number of differences of opinion during the time the Risk Evaluator was being developed. On a number…

I've posted Entry #224 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called We Can End the Boom/Bust Economic Cycle by Becoming More Aware of How the Promotion of Buy-and-Hold Investing Strategies Contribute To It.
Juicy Excerpt: Please take a look at the following series of numbers:
25, 6, 33, 6, 22, 9, 24, 7, 44
If the pattern evidenced in this series of numbers continues, which of the following numbers will come next?
(1) 25 or something in that…

I've posted Entry #245 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Rob Arnott Points Us to a Mathematics That Is Simple to Understand But Hard to Accept.
Juicy Excerpt: Rob Arnott said something amazing a number of years back. He said: “Returns are for the most part a matter of simple arithmetic. Much of our industry seems fearful of basic arithmetic of this sort.”
Why would that be? We all want to invest effectively. If we could all invest…

I've posted Entry #248 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Research and Marketing Get Mixed Together in the Investing Realm.
Juicy Excerpt: It’s dangerous to mix marketing and research. Marketers tell people what they want to hear to make a sale. Researchers tell people what is to help them learn about a subject. Marketing appeals to the emotions. Research is objective; it makes its appeal to logic. Millions of investors think they are…

I've posted Entry #327 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Using Historical Return Data to Guide Your Investing Strategies Leads to More Uncertainty, Not Less.
Juicy Excerpt: Silver’s take was rooted in two realities: (1) three-point polling errors are common; (2) there was an unusually high number of undecided voters going into the election and that increases the chances for seeing a polling mis-prediction. Silver did not ignore the polls;…

I've posted Entry #218 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller's Record at Short-Term-Timing Predictions Is Poor.
Juicy Excerpt: Most interviews with Shiller focus on his short-term-timing predictions rather than on the important implications of his research re how investors should be changing their stock allocations in response to big price swings as a means of keeping their risk profiles roughly constant. The reality is that Shiller…

I've posted Entry #232 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Four Years of Perfectly Efficient Madness.
Juicy Excerpt: The 126 percent return we saw over those four years was the product of investor emotion. All signs point to this conclusion. There is no rational reason why so much economic growth would be squeezed into such a short time-period. The fact that so many investors rationalize away the case against their favored strategy is just…

I've posted Entry #62 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Valuation-Informed Indexing Will Keep Working After Everyone Finds Out About It.
Juicy Excerpt: If knowledge of the realities spreads, price volatility will be greatly diminished. In a world of Valuation-Informed Indexers, there will never again be another bull market. Each time prices go up more than the amount justified by the economic realities, investors will lower their stock…

I've posted Entry #171 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Getting In Touch With Your Inner Goon.
Juicy Excerpt: People don’t like it when I talk about “goonishness,” the highly abusive behavior evidenced by many Buy-and-Holders when their investing beliefs are challenged.
Buy-and-Holders like to think of themselves as sophisticated, intelligent, informed, rational, research-based investors. I hurt their feelings when I accuse them of…

I've posted Entry #146 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called What's Missing from the Wall Street Journal Article Saying "Goodbye" to the 4% Rule?
Juicy Excerpt: Making mistakes need not be such a terrible thing. It is often by making mistakes that we learn new things. But the learning process is short-circuited if we never ask the “Why?” question. The error in these studies are not hard to uncover. I saw it the first time I looked at one of…

I've posted Entry #345 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Our Minds See Patterns Where They Don't Exist and Fail to See Them Where They Do.
Juicy Excerpt: Our minds really do look for patterns to make order out of chaos. I think that the Buy-and-Holders are on to something important with that observation. But I believe that we also fail to see patterns that really do exist. I look at the pattern of valuation levels rising and falling in…

I've posted Entry #272 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called How a Visit to the Dentist Is Like a Visit to an Investing Analyst.
Juicy Excerpt: For a long time, most of the work done by humans was done in the physical realm. A time came when we learned to make machines and achieved great advances by enjoying the leverage that comes when an internal combustion engine does the pushing rather than our legs. We gained even more leverage when we…

I've posted Entry #139 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Our Mixed-Up Ideas About Stock Investing Risk.
Juicy Excerpt: No one deliberately tries to drive in a risky manner.
No one starts out a school year saying “I want to risk getting an “F” this semester, so I am going to try to get in the habit of never doing homework.”
No football player practices how to drop the football with the aim of increasing the risk of a…

I've posted Entry #242 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller's Claim That It Is Now Investor Anxiety Rather Than Investor Exuberance Pushing Stock Prices Up Is Unconvincing.
Juicy Excerpt: The problem that I have with the Shiller analysis is that he seems to be saying that opposite sorts of emotional takes could produce the same result. Investors were irrationally exuberant in the late 1990s. That caused prices to rise to insanely…

I've posted Entry #143 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Using a Variable Withdrawal Rate Is No Advance Over Using a Fixed One.
Juicy Excerpt: Say that instead of taking out a fixed 4 percent, you take out a variable 4 percent, insuring that your withdrawal will be less in times of poor returns than at times of good returns. In this scenario, you will be taking out only $20,000 in Year 11. Since you are taking out only half of the money that…

I've posted Entry #172 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Most Investors Should Be in Index Funds, But Not for the Reason Usually Given.
Juicy Excerpt: Fund managers face enormous competitive pressures not to pick the stocks with the best chances of performing well in the long term for their funds. That’s why most fund managers do not pick stocks effectively. Fund managers are not paid to produce results for their investors. They are paid…

I've posted Entry #121 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Federal Reserve Interventions Cannot Prop Up Stock Market Prices.
Juicy Excerpt: I believe that that is why the Fed is acting to reassure investors. The thought is perfectly rational — It’s better to spend some money preventing a panic than it would be to spend the large sum it would take to recover from the panic. I do not believe that the Fed is responding primarily to political…

I've posted Entry #206 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called When We Say That the Market Is Smart, We Are Flattering Ourselves.
Juicy Excerpt: The market is comprised of people who own stocks. The market is us. When we argue that the market is smart, we are flattering ourselves.
The only way that the market could be smarter than the rest of us is if the people who comprise the market were smarter than the rest of us. Rich people own more…

I've posted Entry #155 to my Valuation-Informed Indexing column at the Value Walk site. It's called Critics of Buy-and-Hold Need to Form Communities Where Their Criticisms Are Fully Developed.
Juicy Excerpt: I argued in one of my e-mails to Joachim that: “People are social animals. They need to hear others endorse an idea to have confidence in it. It would make a huge difference if there were a place where people could go to find that lots of knowledgeable folks believe in these ideas.…

I've posted Entry #20 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller Did Not Anticipate the Tech Bubble Pop.
Juicy Excerpt: Shiller anticipated the second biggest economic crisis in U.S. history, a crisis that has already established itself as the most important political development of the first decade of the 21st Century. He did this more than eight years before it took place. He spoke publicly about why the crisis was coming at a time when…

I've posted Entry #144 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Buy-and-Holders Show Their Worries in Discussions of Failed Retirement Studies.
Juicy Excerpt: Beth Strycharz wrote: “It’s quite obvious that conventional wisdom for the past 10 year is out the window. New game, new rules, new plans.”
This has always been the problem with the Old School studies (and with Buy-and-Hold in general). The studies pretend to be science. But they…

I've posted Entry #241 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Research on Bubbles Should Be Encouraged Despite the Limited Amount of Historical Data Available to Us.
Juicy Excerpt: My concern is that Shiller’s comment can fairly be read as suggesting more than the need to state a caveat when presenting research-based findings. His words can be interpreted as saying that we cannot build on his “revolutionary” (this is Shiller’s word)…

I've posted Entry #258 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called It Is Critical to Distinguish Returns-Sequence Risk from Valuations Risk When Calculating Safe Withdrawal Rates.
Juicy Excerpt: Kitces makes a critical (and common) mistake, in my assessment. He fails to distinguish the risk that comes from retiring at a time of high valuations and the risk that comes from experiencing a poor returns sequence. He refers to the time-periods that…

I've posted Entry #244 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called We Should Ignore Shiller's Stories and Focus on Shiller's Number.
Juicy Excerpt: I agree with Shiller that investors are highly influenced by the stories they tell themselves about stocks. But I agree with the Buy-and-Holders that the best investing insights are quantifiable, action-orinted investing insights. P/E10 is the number that makes Shiller’s story-telling insights actionable…

I've posted Entry #136 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Wall Street Doesn't Benefit from the Promotion of Buy-and-Hold.
Juicy Excerpt: It’s not so much that Wall Street wants people always to buy stocks. It’s that Buy-and-Hold possesses a powerful intuitive appeal, especially during bull markets. Valuation-Informed Indexing is the first true research-based strategy and there is now a mountain of evidence showing that it is superior to…

I've posted Entry #331 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Valuations Matter -- But How?
Juicy Excerpt: I can count seven others ways of thinking about valuations among people who cannot bear to come to the conclusion that I have come to, that profits attributable to overvaluation rather than true economic growth are always reduced to cotton-candy nothingness in the long term.
One, there is a tiny group of people who truly believe that the…

I've posted Entry # to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Stock Overvaluation Hinders Economic Growth Far More Than Does the Budget Deficit.
Juicy Excerpt: The sad reality is that the same human weaknesses that causes the budget deficit draw us to Get Rich Quick investing strategies. The politicians aren’t doing the job they need to do, that much is so. But it’s not because politicians are by nature bad people. It’s because politicians…

I've posted Entry #324 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Valuation-Informed Indexers Only Temporarily Miss Out on Gains When Bull Markets Continue Longer Than Expected.
Juicy Excerpt: Valuation-Informed Indexing strategies often do not pay off for a good bit of time. That much is certainly true. But they always pay off (at least on a risk-adjusted basis and usually even on a nominal basis) to those patient enough to permit the various waves…

I've posted Entry #154 to my Valuation-Informed Indexing column at the Value Walk site. It's called Why Advances in Our Understanding of How Stock Investing Works Are Recognized Slowly.
Juicy Excerpt: One, 32 years is not really that long a time-period in the grand scheme of things. We are accustomed to experiencing rapid change in many fields of human endeavor. Try to sell a computer that was popular 32 years ago today and you will not get far. So in one sense 32 years really is a long…

I've posted Entry #334 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Belief in an Investing Strategy Comes First and Then Evidence Follows.
Juicy Excerpt: Some people believe in God and some do not. If you ask a person who believes in God where we come from, he will say that God created us. If you produce compelling scientific proof that we evolved from a lower form of animal, you have him trapped, no? You have demonstrated that he is wrong in his…

I've posted Entry #201 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller Doesn't Dare Say What He Believes Is the True Cause of the Economic Crisis.
Juicy Excerpts: Samuelson hints at the true cause of the crisis without quite becoming so bold as to identify it bluntly.
He tells us: “We were victims of success. The crisis originated from 25 years of prosperity, from roughly the end of 1982 to the end of 2007. This conditioned people —…

I've posted Column Entry #39 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Stock Prices Are Cyclical: Here's Why.
Juicy Excerpt: What is it about the boom-bust cyclical pattern that has made it so dominant for so long? I believe that there are two competing forces at work: (1) the Get Rich Quick impulse that exists in the heart of every human (and, thus, every investor); and (2) the economic realities that must exact financial pain on those who fail…

I've posted Entry #317 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Bogle Believes in One Version of "Reversion to the Mean" and Valuation-Informed Indexers Believe in Another.
Juicy Excerpt: Say that you flip a coin 100 times and it comes up heads in 60 of those 100 tosses. Bogle’s understanding of “Reversion to the Mean” is that it is likely that, if you toss the coin another 100 times, the percentage of total times that it comes up heads is…

I've posted Entry #188 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller's Mistaken Understanding of Why Only Long-Term Returns Are Predictable.
Juicy Excerpt: The term “noise” suggests a meaningless factor, a factor that need not be given much consideration. The Buy-and-Holders are using the term properly, Shiller is not.
Buy-and-Holders believe that the returns of greater than 6.5 percent real and the returns of less than 6.5 percent real…

I've posted Entry #170 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called How to Become the Most Hated Blogger on the Internet -- Point Out the Dangers of Buy-and-Hold!
Juicy Excerpt: The YouTube video of my Ignite presentation to the Financial Bloggers Conference for 2013 (FinCon13) is now available. It’s titled How to Become the Most Hated Blogger on the Internet. The fellow who writes the award-winning Joe Taxpayer blog wrote about the presentation…

I've posted Entry #280 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called It's Not Possible for a New Understanding of How Stock Investing Works to Become Popular Until People Lose Confidence in the Old Understanding.
Juicy Excerpt: There’s no way to know for certain that Shiller is right. The historical data supports him. But data from earlier times can be dismissed on the grounds that the economic conditions under which that data was produced no longer…

I've posted Column Entry #46 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called It's Not Always a Good Idea to Lower Your Stock Allocation As You Age.
Juicy Excerpt: The full reality is that aged investors are better sticking with high stock allocations at times of moderate and low prices and all investors (not only aged investors) should be going with low stock allocations at times of high prices. Should age then not be a factor that investors consider when…

I've posted Entry #319 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Three Scenarios for What We May See Following the Next Price Crash.
Juicy Excerpt: The third scenario is that we could see an economic hit strong enough to bring on a significant recession but not so strong as to bring on a Second Great Depression; there is a range of possibilities that follow from any P/E10 level so it is at least possible that we could avoid another Great Depression…

I've posted Entry #374 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called What Buy-and-Holders Really Believe.
Juicy Excerpt: Stock returns have been dramatically subpar for 18 years running now. But Buy-and-Holders are not unhappy with them. When they assess the merit of their strategy, they consider the time-period from 1982 (the beginning of the last bull cycle) through 1999 as well, years when Buy-and-Hold performed very well indeed. Over the last 35…

I've posted Entry #82 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Much to Gain by Killing Buy-and-Hold.
Juicy Excerpt: Academics have known about the holes in the Buy-and-Hold model for years now. They have also known that they would be putting their careers in jeopardy to talk about them openly. So they have generally kept their mouths shut. That doesn’t mean that they have turned their brains off. They have been thinking about how stock investing…

I've posted Entry #104 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called How Shiller's Ideas Will Reach the Tipping Point.
Juicy Excerpt: I’ve been saying for several years that the big day is going to be when John Bogle walks to the front of an auditorium and gives a speech containing the words “I” and “Was” and “Wrong.” That would be written up on the front page of the New York Times. Once it is written up on the front page of the New…

I've posted Entry #25 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Stocks Are Less Risky Than Bonds.
Juicy Excerpt: Stocks can be more risky than bonds. Obviously there was huge risk when prices were so high that the likely long-term stock return was a negative number. But the risk of stock investing is a voluntary risk. It’s not that stock investors collectively take on more risk than the risk that is taken on by bond investors collectively. Stock…

I've posted Entry #260 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller's Ideas Should Be Treated as Mainstream Ideas.
Juicy Excerpt: Shiller is out there. His view of how the stock market works is about as far removed from the view held by the Buy-and-Holders as it is possible to imagine.
So they dismiss him. They patronize him. They ignore him.
Take a look at the investing advice that Jack Bogle was advancing in 1980, the year prior to the…

I've posted Entry #14 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Five Forces That Will Change the Future of Stock Investing.
Juicy Excerpt: People don’t see this yet because in the grand scheme of things the idea of rooting investing analyses in data is so new an idea. In days to come, people will look back at the idea that valuations do not need to be considered in investing analyses as a fad. We will soon be entering a post-Buy-and-Hold Era in…

I've posted Entry #191 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called TIPS, IBonds and CDs Are Better Alternatives to Stocks Than Bonds.
Juicy Excerpt: Perhaps most important of all, it is an easy thing to shift money from TIPS or IBonds or CDs to stocks when stock prices drop. Bonds are like stocks in that there are time-periods in which you are down and in which you very much do not want to sell. The Valuation-Informed Indexer looks to stocks for…

I've posted Entry #15 for my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Seven Rationalizations for Sticking With the Conventional Investing Advice.
Juicy Excerpt: We have been living in denial of this reality for 30 years. Shiller’s insight puts us on the path to learning for the first time in history how stock investing really works. That’s exciting. But some news is so good that it is hard for the humans to let it in. This change is so big that it…

I've posted Entry #123 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller's Chilling Words About the Limits to Tolerated Discussion of the Investing Realities.
Juicy Excerpt: Shiller says early in his lecture that he was a “total outcast” when he first began exploring his new investing model. He notes that: “I had tenure, so I could do it.” But, still, “you don’t want to do anything that is too out of fashion.” Fortunately, “we have a…

I've posted Entry #329 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Free Market Advocates Should Be Ashamed of Stock Crashes.
Juicy Excerpt: I am a conservative (with sympathies for a good number of liberal positions). One of the things that makes me a conservative is my love for free markets. So I naturally want to see our free market work. I don’t like stock crashes because they send a message to millions that they don’t.
And I think it is…

I've posted Entry #247 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Only Way to Make Sense of Stock Investing Is to Acknowledge That It Doesn't Make Sense.
Juicy Excerpt: Humans are not the rational animal. We are the rationaliZING animal. We do crazy stuff. Then we make up stories to persuade ourselves that the things we do make sense somehow.
Humans buy…

I've posted Entry #372 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Bull Market Has a Long Memory of Bearish Times -- and That's Okay!
Juicy Excerpt: More importantly, I don’t think that Shiller would say that the P/E10 metric offers precise guidance. Using the median for earnings rather than the mean pulls the number from the very, very scary high of 31 down to just the very scary high of 28. That’s not much of an improvement. The 32 reading…

I've posted Entry #221 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called You Need to Read Irrational Exuberance Four Times to Pick Up on All Its Insights.
Juicy Excerpt: I remember the second time I read Irrational Exuberance. I was at the beach with my family. Shiller’s words were hitting with as much power as they did the first time I read the book several years earlier. I kept interrupting my wife’s reading of her own book to express my amazement…

I've posted Entry #73 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's titled Valuations Matter More for Indexers Than They Do for Other Investors.
Juicy Excerpt: For an index to provide an average long-term return of 6.5 percent real, it must provide returns far above that at times of low valuations and far below that at times of high valuations. Value Investors can escape the negative of buying at times of overvaluation by virtue of outstanding research…

I've recently posted Entry #197 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called It's Critical to Distinguish Short-Term Bulls and Bears from Secular Bulls and Bears.
Juicy Excerpt: Shiller’s finding that long-term timing always works, combined with Fama’s finding that short-term timing never works, should change how we think about stock investing in a fundamental way. Our natural inclination is to focus on the short-term. We live in the short term and…

I've posted Entry #340 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called It Was the Widespread Belief in Buy-and-Hold Strategies That Caused the Runaway Bull Market.
Juicy Excerpt: The core point that is being made here — that stock valuations have remained high for a very long time — is 100 percent correct. I prefer to start counting in 1996 since prices were only high but not yet insanely high until then. But even using the later starting date leads…

I've posted Entry #339 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Buy-and-Holders Base Their Investing Decisions on Flawed Forecasts, Just Like All Other Investors.
Juicy Excerpt: Why do Buy-and-Holders not identify the return being paid on stocks before buying them? Because they really do make forecasts but they are fantasy forecasts that they do not want to acknowledge even to themselves because they understand that these forecasts would sound…

I've posted Entry #41 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Emotions Trump Numbers.
Juicy Excerpt: The move in recent decades to research-based investment strategies has made investing decisions moreemotional. Lots of us were going with Get Rich Quick choices in the days when we were going with our gut. But now we are going with Get RIch Quick choices that we tell ourselves are backed by the numbers. The phony numbers encourage us to stick with…

I've posted Entry #212 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Warning Implicit in Outlier P/E10 Values Should Not Be Rationalized Away.
Juicy Excerpt: There’s a funny dynamic that governs our rationalizations for not taking P/E10 levels into consideration when deciding on our stock allocations. When the P/E10 level rises to high but not insanely high levels, we say that moderately high P/E10 aren’t really all that dangerous. When the…

I have posted Entry #145 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Financial Crisis and the Systematic Failure of Academic Economics.
Juicy Excerpt: All stock investors should read an amazing paper produced by the University of Copenhagen Economics Department. It is titled The Financial Crisis and the Systematic Failure of Academic Economics. This is the real story, the news that unfortunately does not often enough end up in the…

I've posted Entry #239 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Every Bull Market Requires a Conspiracy.
Juicy Excerpt: Shiller showed that stock investing risk is not constant but variable. It is possible today to develop tools that would permit investors to reduce the risk of stock investing by 70 percent just by showing them the extent to which they need to adjust their stock allocations in response to valuation shifts to keep their risk…

I've posted Entry #342 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Calm Confidence Is the Mid-Point Between Fear and Greed.
Juicy Excerpt: The same problem that has held back the study of human psychology in general has held back advances in the field of Behavioral Economics. We spend too much time and effort telling people how to avoid pitfalls identified by the study of human psychology and too little telling them the positives — how investors…

I've posted Entry #251 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Applying a Racheting Concept to Safe Withdrawal Rates Makes Sense But Only If Valuations Are Taken Into Consideration.
Juicy Excerpt: The core idea here is valid. Retirements fail because of big hits taken in the early years of a retirement. Even a retirement that called for a 4 percent withdrawal that started in 1996 (when prices were insanely high) will almost certainly survive 30…

I've posted Entry #100 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Shiller Has Not Get Given Clear Advice on How to Implement His Investing Insights.
Juicy Excerpt: I have devoted 10 years of my life to the project of writing articles and developing calculators and recording podcasts and producing column entries that explore Shiller’s model. That shouldn’t be possible. In a sensible world, there would have been hundreds of Shiller-centric sites…

I've posted Entry #199 to my weekly Valuation-Informed Indexing column at the Value Walk site. it's called Investing Strategies That Ignore the Effects of Stock Crashes Cannot Work.
Juicy Excerpt: You really only need to know one thing about stock market history to know that the market is not efficient. Prices crash from time to time. If prices were determined by economic realities, there would be ups and downs in prices. But there would never be crashes. The market lost over $9 trillion in…

I've posted Entry #195 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called "I Get Frustrated With the Slow Pace of Progress in Economics and Finance."
Juicy Excerpt: I am in the process of writing to the 30,000 professors listed at the Social Science Research Network (SSRN) site to let them know about the Valuation-Informed Indexing concept and the research that has been done over the past 33 years showing the superiority of the new model to the discredited…

I've posted Entry #243 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Human Brain Is Not So Much "Wired for Stories," As Shiller Claims, But Wired for Paradigms.
Juicy Excerpt: So I like his story idea a great deal. Still, I believe that it can be refined. I believe that a better way of stating the case is to say that “the human brain is wired for paradigms.” If it were just that we were impressed by stories, I have a hard time understanding why…

I've posted Entry #298 t0 my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Why I Doctored the Numbers Generated By My Retirement Calculator.
Juicy Excerpt: The early version of the article contained a statement saying that the safe withdrawal rate can drop to as low as 1.6 percent when valuations are super high. At the last minute, I changed the wording to say what I say above, that valuations can drop as low as 2 percent when valuations are super…

I've posted Entry #202 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Jeremy Siegel's Views on Where Stock Prices Are Headed Are Not Rooted in Peer-Reviewed Research.
Juicy Excerpt: If Fama is right, stocks can never be underpriced any more than they can ever be overpriced. Stocks are always properly priced in an efficient market. The price that applies when all factors bearing on price are taken into consideration is obviously the proper price.
So…

I've posted Entry #292 to my weekly Valuation-Informed Indexing column at the Value Walk site.It's called Our Political Beliefs Inform What We See in the Investing Research.
Juicy Excerpt: I suspect that Fama is entranced by the spell of the Rational Man concept. I don’t think that investors behave rationally but the full reality here is that Fama’s belief that they do has generated many powerful and genuine insights. One can hardly find too much fault in him for allowing himself to take…

I've posted Entry #166 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Last Week's Nobel Prize Award Is an Acknowledgment That We Do Not Today Know How Stock Investing Works.
Juicy Excerpt: It was a diplomatic act to award the prize to both men. It was not a logically consistent act to do so. One of the two men is right about how stock investing works. One of the two men is wrong about how stock investing works.
By having the two men share the award,…

I've posted Column Entry #38 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Stock Prices Are Not a Random Walk: Here's More Proof!
Juicy Excerpt: We need to get this right. If stock prices really do play out in the pattern of a random walk, Buy-and-Hold is the ideal investing strategy. If stock prices are random, they are unpredictable. If stock prices are unpredictable, then the only way to obtain the high returns offered by stocks is to remain highly…

I've posted Entry #122 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Two Growth Paths for Your Stock Portfolio Over the Next 30 Years.
Juicy Excerpt: Suffering a 65 percent hit to your stock portfolio will haunt you for the remainder of your investing lifetime. You will never recover from that hit.
Those are hard words. But I think they are justified by the graphic. I understand that few will take the idea that a 65 percent price drop can be foreseen…

I've posted Entry #182 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Real Reason Obama Is Having a Rough Presidency.
Juicy Excerpt: At times when valuations are on the increase, spending power is being pumped into the economy. At times when valuations are on the decrease, spending power is being removed from the economy. Voters care about economic results more than anything else. Any President who serves at a time when valuations are on the way…

I've posted Entry #60 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called We Need Higher Commissions on Non-Stock Investment Classes.
Juicy Excerpt: I didn’t want my money tied up in an high-risk asset class paying a poor long-term return and IBonds were at the time paying a government-guaranteed return of 3.5 percent real. All I needed was someone to bring me the papers to sign.
It was not a particularly easy task to find such a person.
The first…

I've posted Entry #350 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Where Greenspan Went Wrong in Doubting His Ability to Contain Irrational Exuberance.
Juicy Excerpt: Red lights deliver warnings to drivers not to proceed into an intersection because there is a good chance that cars will be speeding through the intersection from the other direction at the same time. Say that research showed that, out of every eight times that a driver elects to…

I've posted Entry #323 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called It Is Not Reasonable to Expect a Perfect Correlation Between Valuations and Long-Term Returns.
Juicy Excerpt: There is never one wave of emotion passing through investors at a point in time. There are always multiple waves, some pushing prices up and some pushing prices down. The price that applies is the product of the interaction of the various waves of emotion. The P/E10 level from…

I've posted Entry #86 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Investing Experts Need to Distinguish Opinion From Truth.
Juicy Excerpt: So it doesn’t really bother me if people refer to my findings on safe withdrawal rates as opinion rather than truth. My findings are the product of mathematical calculations. But they are not the mathematical calculations you would engage in if you believed in the Efficient Market Hypothesis. It could fairly be…

I've posted Entry #26 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Numbers on Your Portfolio Statement Are Wrong!
Juicy Excerpt: This one puts me on the spot. If I say “yes,” I sound like a crazy person. If I say “no,” I contradict my claim that valuations need to be taken into consideration when calculating safe withdrawal rates and when performing all others sorts of investment analyses. If valuations matter, they always matter. If…

I have posted Entry #222 to my weekly Valuation-Informed Indexing at the Value Walk site. It's titled The Gruber Rule -- You Must Deceive the Public for Its Own Good -- Applies in the Investing Advice Field Too.
Juicy Excerpt: Jonathan Gruber believed that he was helping people when he crafted Obamacare provisions in such a way so that they could not understand what was really going on. The fellow who got me banned from the Bogleheads Forum believed that he was helping the members of that…

I've posted Entry #157 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Google's Panda/Penguin Update Shows Us Where Opinion on Buy-and-Hold Is Headed.
Juicy Excerpt: The company didn’t know that Google was going to change the rules. It obviously didn’t intend for these businesses to fail. The people with the failed businesses knew that some of the strategies they were employing were dubious. But now they are mad. Not a little mad. Very…

I've posted Entry #169 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called An Alternative to Fama's Explanation of Short-Term Price Changes That Also Fits Shiller's Finding of Long-Term Return Predictability.
Juicy Excerpt: A perfectly rational market would indeed produce short-term randomness. But so would a perfectly irrational market. It is impossible to predict returns that are produced by unforeseen economic and political developments. But it…

I've posted Entry #370 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Biggest Problem With Buy-and-Hold Is the Questions It Takes Off the Table -- Part Two.
Juicy Excerpt: When I was developing the retirement calculator, it occurred to me that it would be helpful for investors using it for me to include some features not included in the Buy-and-Hold calculators. My calculator permits investors to examine how the safe withdrawal rate changes in…

I have posted Entry #156 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Confidence in Buy-and-Hold Is a Mile Wide and an Inch Deep.
Juicy Excerpt: Why don’t the millions of middle-class investors who have their retirement savings invested in the stock market know this? If the academic community has serious doubts about the strategy that millions are following to finance their retirements, shouldn’t we be telling them about…

I've posted Entry #369 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Biggest Problem With Buy-and-Hold Is All the Questions It Takes Off the Table.
Juicy Excerpt: Buy-and-Hold is more than a strategy. It is a model for understanding how stock investing works. The core idea is that the future performance of stocks cannot be known. Believing that takes all sorts of questions off the table. Investors who come to believe that of course make strategic…

I've posted Entry #54 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Data Combined With a Sound Theory Makes a Powerful Case.
Juicy Excerpt: As the poster using the screen-name “Fred Flintstone” notes: “The paper refutes a central tenet of the Boglehead investing philosophy.”
That it does.
But Greyfox brings up a point that has only rarely been examined in much depth.
He says: “Without some sound theoretical basis, there is really no…

I've posted Entry #367 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Shiller Revolution Summed Up in Two Sentences.
Juicy Excerpt: Sometimes when I am ready to leave for an appointment five minutes before I need to leave, I will pull Irrational Exuberance off the bookshelf and turn to a random page and see what I find there. I did that the other day and these are the words that jumped out at me off of Page 254: “The U.S. stock market ups and downs…

I've posted Entry #18 for my weekly Valuation-Informed Indexing column at the Value Walk site. It's called The Shiller Revolution, Postponed.
Juicy Excerpt: My question is: Why aren’t we all on the case? If such well-regarded figures as Rahiv Sethie believe that market timing could work, why aren’t we all engaged in an effort to learn for sure whether it does or not? Sethie has not done the empirical work needed for him to say for sure. Are there academics doing that research today? How…

I've posted Entry #92 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Should There Be a Valuation-Informed Indexing Fund?
Juicy Excerpt: But allocation changes are needed so infrequently that I don’t see much point in starting a fund. Stocks were selling at low or moderate prices for the entire time-period from 1975 through 1995. That’s 20 years in which no allocation change was needed. Stocks have been selling at high prices from 1996 through today.…

I've posted Entry #343 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called An Emotion-Driven Walk Down Wall Street -- A Thought Experiment.
Juicy Excerpt: Each new pay cut would cause the employees who had not yet joined the pay cut bandwagon to become more anxious re what their fate would be if they jumped on the latest trend too late. Just as excessive pay increases had at one time begot ever more excessive pay increases, now excessive pay cuts would beget…

I've posted Entry #270 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called A Critic of Valuation-Informed Indexing Offers a Concise Case for Why Buy-and-Hold Is Superior.
Juicy Excerpt: People can refine, add gimmicks, accessories, etc, or even purposefully misconstrue (AHEM, looking at YOU, Rob!) but to me, THIS is the essence of buying and holding. So, for you to go on a decades-long intense daily public jihad against those principles, and the people who…

I've posted Column Entry #8 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Emotional Market Theory.
Juicy Excerpt #1: I am in complete agreement with Bogle that the loss of market capitalization that we saw during the price crash was irrational; nothing happened in the world over the course of that year to justify the loss of $8 trillion in market capitalization. However, I believe that Bogle came to an entirely unwarranted conclusion about this…

I've posted Entry #365 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Stocks Have Been Performing Poorly For a Long Time But Most of Us Haven't Noticed.
Juicy Excerpt: From January 1, 2000, through December 31, 2016, the annualized real return on stocks was 2.25 percent. That’s not good. That’s poor performance. 17 years of it.
Investors who don’t adjust their expectations of stock performance to reflect valuations were expecting annual returns…

I've posted Entry #51 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Few Investors Enjoy a Lifetime Stock Return as High as the Average Stock Return.
Juicy Excerpt: The vast majority of middle-class investors following Buy-and-Hold strategies will earn a return significantly less than the average return of 6.5 percent real. We don’t have data telling us the lifetime return earned by most investors. My guess is that the number is about half of the…

I've posted Entry #304 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Nine Rules for Exercising Price Discipline When Buying Stocks -- Part One.
Juicy Excerpt: Many investors are not impressed by the 35 years of peer-reviewed research showing that long-term predictions always work. There is great interest in short-term predictions — experts in this field continue to offer them on a daily basis despite the mountain of research showing that they don’t…

I've posted Entry #106 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Buy-and-Hold Investing Caused the First Great Depression Too.
Juicy Excerpt: Now let’s consider the other factors listed. Aren’t they all things that could well have followed from the crash? Yes, we had bank failures. People had just lost most of their money in a stock crash! So what would you expect? I think it would be fair to say that these purported causes might be only…

I've posted Entry #34 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called I Favor Market Timing -- No Apologies.
Juicy Excerpt: Larry said: “What you have done is beyond awesome.” He said: “The P/E10 tool could drastically change how the entire investing industry operates and measures risks.” He said: “I believe this tool, combined with quality macro-economic analysis, will change the history of investing in this country.”
So Larry and I are…

I've posted Entry #289 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Is It Possible That the 4 Percent Rule Still Applies Even Though the Safe Withdrawal Rate Varies With Changes in Valuations?
Juicy Excerpt: I engaged in extensive e-mail correspondence with him re this topic a number of years back. He took the same position then that he takes in his recent article — he believes that the SWR can climb higher than 4 percent at times of low valuations…

I've posted Entry #252 to my Valuation-Informed Indexing column at the Value Walk site. It's called Our Beliefs About How the Stock Market Works Will Change Following the Next Crash.
Juicy Excerpt: I read a bit more about the Ashe study on the internet and came across an aspect of it that I overlooked in my earlier article that I find highly encouraging. The power of the false responses to pressure real study participants to give wrong answers was greatly reduced when even one of the fake…

I've posted Entry #48 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called What Causes CD Rates to Rise and Fall?
Juicy Excerpt: The primary reason why TIPS and IBonds and CDs were paying such absurdly juicy returns in January 2000 is that stock prices were sky high. When stocks are priced at three times fair value, irrational exuberance is at its zenith. That means that 90 percent of investors want to buy stocks, stocks, stocks, stocks, and price…

I've posted Entry #101 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Why Do So Few Blame Buy-and-Hold for the Economic Crisis?
Juicy Excerpt: We all played a part in causing this crisis. Even those of us who refused to buy stocks at insanely high prices failed to speak up against the bull market in clear and firm and bold terms. We are not idiots. We knew the crazy bull prices couldn’t be real. Now we look at the human misery we have caused and want…

I've posted Entry #63 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called Valuation-Informed Indexers Can Retire Five Years Sooner.
Juicy Excerpt: Both portfolios survived until Year 60/Age 85 in each of the hundreds of return sequences tested. The most likely end-point portfolio value for the Buy-and-Holder was $754,000. For the Valuation-Informed Indexer, the most likely end-point portfolio value was $1,095,000.
The VII portfolio also had a higher best…

I've posted Entry #373 to my weekly Valuation-Informed Indexing column at the Value Walk site. It's called It's Logically Inconsistent to Buy Stocks in Response to Valuation Shifts But to Rule Out Selling Them for That Reason.
Juicy Excerpt: I think that the biggest cause of the problem is an unfortunate marketing reality: there’s generally more money to be made selling stocks than there is to be made selling the safe asset classes that investors should be buying into when stock prices…

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Yes, I get that you are now 100% fixated on punishing me, rather than pursuing your own goals. If Wade’s paper gets written up in the New York Times, he gets all the glory and rewards. The first step is getting recognized experts like Bengen to acknowledge that he was the first. And that step is checked off. Of course, Wade could wave his hands and say “Shucks no, all this glory belongs to Rob Bennett. He’s the real brains behind any CAPE-based timing strategy.” Yes, that’s the ticket. That’s what will happen. Or you could take two minutes right now to set Bengen straight. Nope, you said that’s not an option. Anytime that anyone writes honestly about what the last 36 years of peer-reviewed research teaches us all about how stock investing works, it benefits each and every one of us who is trying to do the same. There is no limit on the credit that can be handed out. Millions of investors need access to accurate information. Thousands of investment advisers want to give it to them. The thing that is standing in their way is a Wall of Ignorance. People cannot believe the realities — that we now know of a way to invest in stocks that is far less risky and that allows people to retire far earlier in life — because they just sound too good to be true. Anyone who does anything to knock down that wall is helping all of us in a big way. Say that Wade does as you say. I am not saying that I think he would — I do not. But just say for purposes of discussion that he did. That would be an absolute boon for me. If the study that Wade and I prepared gets publicized — regardless of who gets the credit for it — it instantly becomes easier to tell the truth about stock investing at hundreds of different sites. So all of my stuff — I’ve developed a lot of it over the years — gets out. How does that hurt me? You always talk as if the key to getting credit is being smarter than other people. That’s not the reality here. Most Buy-and-Holders possess more than enough […]

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Uh oh, Rob. Bill Bengen points out the research and data that says you are wrong and that VII is a failure: “I have not studied in great detail the correlation between Shiller CAPE and withdrawal rate. However, Michael Kitces, a celebrated financial planner who has also done some important research in the area of withdrawal rates, produced an interesting chart some years ago. It showed a strong negative correlation between CAPE and each year’s safe withdrawal rates. So, I am not surprised at the conclusion that Wade reached, although I believe he may have been the first to quantify the “boost” to SAFEMAX by using a timing strategy. However, for those who wait for a low enough CAPE to invest fully in stocks, it has been a frustrating 25 years, as CAPE has been below its average of about 16 only about 25% of the time during that span (if that much). Today, of course, CAPE stands at more than twice its long-term average. It will be interesting to see if it does indeed “mean revert”, and even drop below its long term average. The only time that has happened in the last 25 years was for a few weeks in 2009. ” That last paragraph is power-packed stuff, Anonymous. I am grateful to you for sharing it with us. The claim that the last 25 years have been “frustrating” for Valuation-Informed Indexers is true only from the perspective of a Buy-and-Holder. Yes, if we have missed out on gains, then it could be viewed as frustrating. But the entire question in dispute is the question he puts on the table two sentences later when he questions whether prices will eventually mean revert or even drop below their long-term average. If that happens, the math shows that the Valuation-Informed Indexers will be far, far ahead of the Buy-and-Holders, too far ahead for the Buy-and-Holders to entertain any realistic expectations of ever catching up. Do I believe that prices are going to mean revert? 100 percent. I have never been more sure of anything in my life. Could I be wrong? 100 percent. I am one of those darn humans. We get them wrong all the time. All of us do. That includes me. We should […]

I’ve posted Entry #376 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called How Many Bull/Bear Cycles Are Required to Prove That Valuations Matter? Juicy Excerpt: I sometimes make the claim that 100 percent of the evidence available to us today supports Shiller’s view of how stock investing works and 0 percent supports Fama’s view. I of course understand that the statement strikes most Buy-and-Holders as extreme and absurd. But I advance the claim sincerely. It’s that hill-and-valley graphic showing how valuations play out in the long term that persuades me that the case is so strong. The hill-and-valley graphic applies for the entire history of the stock market. And it is logically incompatible with a belief in Buy-and-Hold. A visitor to my website asked me the other day how many times the hill-and-valley pattern has played out. The answer is four times. We came to the end of one bull/bear cycle in the early years of the 20th Century. We came to the end of a second at the onset of the Great Depression. The third ended with the stagflation of the 1970s. And we are presumably nearing the end of the fourth bull/bear cycle in our nation’s history today. Four completions of the cycle was not enough evidence to make the case for my friend. He asked me to get back to him when I can say that the same basic cycle has played out not four times but thirty times. Related PostsValuation-Informed Indexing #270: A Critic of Valuation-Informed Indexing Offers a Concise Case for Why Buy-and-Hold Is SuperiorValuation-Informed Indexing #269: Eight Questions That Should Be Keeping Buy-and-Holders Up at NightValuation-Informed Indexing #260 : Shiller’s Ideas Should Be Treated as Mainstream IdeasValuation-Informed Indexing #267: Take Valuations Seriously and You Will Discover Things That You Were Not Initially Even Seeking to DiscoverValuation-Informed Indexing #258: It Is Critical to Distinguish Returns-Sequence Risk from Valuations Risk When Calculating Safe Withdrawal RatesValuation-Informed Indexing #259: Return Predictions Are Implicit in All Investing Advice

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Hi Rob. Come join us. Love, Robert, Wade, Bill and Michael We’ll all be working together in the days following the next price crash, Anonymous. The only difference is that there will be more human misery if we wait. I vote for us all pulling together today. But you know what? I only get one vote. Others get to decide what others do. So we will have to wait a bit to see how things play out. I naturally wish you all the best that this life has to offer a person. Rob Related Posts “We Will All Be in a Better Place When I Can Go to Any Discussion Board or Blog on the Internet and Post With 100 Percent Honesty and Not Have Any Concern Whatsoever That Intimidation Tactics Will Be Directed At Me. We All Do Our Best Work When We Feel Free to Follow Our Ideas Where They Lead Us As We Further Develop Them. I Want That for Everyone.”“I Have Raised the Possibility of an Amnesty for People Who Have Continued to Promote Buy-and-Hold Because They Once Truly Believed in it and Who Are Suffering Cognitive Dissonance re the Last 34 Years of Research Because It Is Just Too Hard for Them to Accept That They Got Something Wrong. But I Can’t Adopt an Amnesty By Myself. We Have to Get Congress Involved. We Need to Have a National Debate.”“After the Crash, the Floodgates Open. People Will Give Up Their Feelings of Embarrassment and Shame and Become Determined to Get Things Back on the Right Track. At That Point the Owners of the Bogleheads Forum Are Not Going to Be Resisting My Efforts to Take Over. They Are Gong to Be Asking Me to Take Over. We Are Going to Be Friends.”“If I Had the Power to Release You All of Your Prison Terms and Your Civil-Suit Liabilities and Your Various Embarrassments, I Would Do It In Two Seconds in Exchange for Your Willingness to Permit the National Debate That Thousands of Our Fellow Community Members Have Evidenced a Desire to See Proceed.”“Shiller Showed Us That It Is Primarily INVESTOR EMOTION That Determines Stock Prices, Not Economic Developments. So We All Need to Make a Switch to Talking Primarily About Investor […]

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: http://www.aaii.com/journal/article/insights-on-using-the-withdrawal-rule-from-its-creator#comments Bengen is asked about and comments about Wade, Shiller, Michael Kitces, FIRECalc, CAPE. There’s even a link to one of Wade’s papers (sadly, not the one you wrote.) This is an active comment thread, so there’s no excuse for you not jumping in. But you don’t. How can you just sit on the sidelines? You say you have the most important job in the world. This is right in your freakin wheelhouse. If you stay silent now, then obviously nothing will ever rouse you from your hibernation. I’m grateful for the link, Anonymous. I have commented at hundreds of places. The problem is certainly not that I have not commented enough. We have a problem as a society. Shiller provided us the last piece of the stock investing puzzle in 1981. Had he published his “revolutionary” (his word) research findings in 1961, there never would have been any Buy-and-Hold. But it didn’t happen that way. By the time Shiller showed that valuations affect long-term returns, we already had an entire industry built around Buy-and-Hold. All of the powerful and wealthy people who were making their living promoting Buy-and-Hold did not want their clients and readers and friends to realize that they had made a mistake. So they kept quiet about the far-reaching implications of what Shiller had done. They praised him, they patted him on the head, they patronized him, down the road a piece they even awarded him a Nobel prize. But they didn’t change any of their strategic recommendations to reflect his research findings. And, as time passed, it became harder and harder for them to acknowledge their mistake and thereby bring the cover-up to an end. It’s now been 36 years. It’s now not just hard to admit the mistake, as it would have been in 1981. It’s now very, very, very, very hard. I did not cause any of this. I came along in 2002, when I saw that Greaney got the numbers wrong in his retirement study and told my friends at the Motley Fool’s Retire Early board. Hundreds of them saw right away how important that post was. They said that I had started the most important discussion ever held in that board’s history. Greaney threatened to kill family […]

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: “But they have not emotionally taken in the knowledge that they possess so that they can make productive use of it. …The knowledge that they possess sits in their brains but they have not integrated it with their other thoughts” And don’t you think it’s a wee bit presumptuous to claim you know the inner working of the minds of thousands of people you’ve never met, many of whom you agree are far more intelligent and experienced than you are? I’m intelligent enough to see that there is no valuation adjustment in the retirement study posted at Greaney’s site, Anonymous. And I am intelligent enough to know that Shiller’s research showing that valuations affect long-term returns must be legitimate research or else he would mot have been awarded a Nobel prize for it. I am intelligent enough to know that there is no place for death threats in discussions of stock investing. And that there is no place for demands for unjustified board bannings. And that there is no place for thousands of acts of defamation. And that there is no place for threats to get an academic researcher fired from his job. If you have a better explanation for the events that we have seen transpire over the past 15 years, I would be happy to hear it. Neither you nor anyone else has even tried to put forward a better explanation. So, no, I don’t think it’s presumptuous at all. These events demand an explanation. And there is an explanation available in the psychological literature — cognitive dissonance. So that’s the one that I am going with until I hear something better. You don’t have to accept my explanation if you don’t care to. You asked me a question and I gave you an honest response. My explanation is 100 percent sincere. I am as intelligent as I am, no more and no less. And that’s what I have come up with at this point in the proceedings. I look for new insights every day. So perhaps down the road a bit I will be able to add some detail to it. My best wishes. Rob Related Posts“At the Very Bare Minimum, We Need to Make It a Practice to Tell Both Sides of […]

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: “Stocks are today priced at two times fair value.” To be clear, this is a fact Wall Street is not aware of – otherwise they would immediately dump stocks. Is that fair to say? You are making a great point here, Anonymous. If you would reflect on this point a bit, the entire matter would click for you. Just about everybody on Wall Street is aware intellectually of what the P/E10 level is today. You see it mentioned all the time in articles. These people are obviously not dumb. So on an intellectual level, they know what they need to know. But they have not emotionally taken in the knowledge that they possess so that they can make productive use of it. They rationalize away this knowledge that they possess. They tell themselves “oh, nobody knows when the crash is coming and I cannot afford to miss out on gains in the meantime” or whatever. The knowledge that they possess sits in their brains but they have not integrated it with their other thoughts on all of the various strategic questions and so it is as if the knowledge did not exist. It is passive knowledge. It is not being put to productive use. It helps to remember what happened in the famous psychology experiment from the 1950s, the Asch experiment. People were put in a room and asked to identify which of two lines — a 12-inch line and an 18-inch line — were longer. Their brains possessed all the knowledge needed to supply the correct answer. It was obvious to them that the 18-inch line was longer. But the four people who were plants and who spoke before them all identified the 12-inch line as longer. This psychological reality neutralized the knowledge they possessed. Humans are social creatures. Evolution put something within us that tells us “don’t go against the tribe no matter what your brain tells you.” So they told the person conducting the experiment that they “thought” the 12-inch line was the longer one. Their emotions cancelled out the product of their mental processes. All of these people on Wall Street “know” what it means to say that stocks are priced at two times fair value, Anonymous. But their emotions — their […]

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Rob, It’s the same old thing, people think the party will never end. until it does. I have a friend who retired with $1million cash, his advisor told him to put it in the market in 2008. Well after a 60% loss he sold I guess anyone would. After this his advisor suggested going back in with the rest to “make his money back stocks, are cheap”. Well after all the dust settled he was left with $150,000. He cant go back to work and now he lives on SSI and depression. I myself have only 10% allocated to stocks now. Until you live through this or know someone who has you dont get it, the goons don’t because they cant be wrong. What really bothers me is the “common knowledge” that markets ALWAYS comes back? Really? all advisors say this, It is in all the financial articles on the web. I know I can’t remember the dates, but 7, 15, 20 years to recover. in the past,I for one do not want to sit and wait in fear hoping the market will come back for the rest of my life. Thank you for working so hard to get the word out, some of us get it Rob. Am I trying to get the word out or am I trying to learn myself? I think that the bottom line here is that I am trying to learn myself. There’s a message that I push. But, when you boil it all down, that message is: “Not one of us knows as much as he thinks he does, so we should all be willing to hear the other fellow out and learn what we can from someone coming at things from a different perspective.” That’s a process that serves us well in our efforts to learn in all other fields of human endeavor and it seems to me, that given how important investing is, it makes sense for us to apply the same learning process there that works in every other other field of human endeavor. Thanks for stopping by, Max. Non-Dogmatic Rob Related Posts“Part of the Job is to Describe the Pressures that Caused so Many Generally Good and Smart People Either to Participate in the Cover-Up […]

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: “It’s his abusiveness.” Really? Here are just a few of your quotes from those pesky Post Archives. “The “4 percent rule” has caused millions of busted retirements” “When you calculate the SWR accurately, you find that the withdrawal rate that is described in the Old School studied as “100 percent safe” has only a one in three chance of working out for those who retired at the top of the bubble. That means that there are going to be millions of busted retirements resulting from just this one error” “I think the Old School safe withdrawal rate studies caused millions of busted retirements by getting the numbers so wildly wrong.” “There are going to be millions of busted retirements resulting from the demonstrably false claims put forward in the Old School safe-withdrawal rates studies.” There’s no conflict between those statements and what I am saying here. The 4 percent rule will have caused millions of failed retirements in the days following the next crash (we obviously will not have any problem if it turns out that the last 36 years of peer-reviewed research is not legitimate research). Who is responsible for those millions of failed retirements? If it was all a mistake, no one was responsible. If it all was a mistake, then we all just have to be careful not to repeat the mistake. But that’s not the situation that we are dealing with. I pointed out the mistake in a post that I put to the Retire Early board at the Motley Fool site on the morning of May 13, 2002. Thousands of our fellow community members expressed excitement over the post, saying that they saw it as the most valuable post in the history of the board. Big-name experts like Rob Arnott endorsed the post, saying it checks out with what the last 36 years of peer-reviewed research says in every way and that it opens up the way to hundreds of big advances in our understanding of how stock investing works. A fellow with a Ph.D. in Economic saw how excited people were over the things they were learning in the debate that followed the post asked me if I would be willing to co-author research showing that this post led us […]

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: “I believe that Greaney has caused millions of failed retirements.” Exactly how? You’re still waffling on that. If it’s his 4% rule you should forget about nobody Greaney and focus on famous Bengen, who says 4.5%. If Greaney busted millions of retirements, Bengen certainly busted billions. If it’s Greaney’s abusiveness, how does his abuse bust the retirements of millions of people who never heard of either of you? It’s his abusiveness. Greaney didn’t come up with the 4 percent rule. He is not responsible for the intellectual mistake. I don’t think it would be fair to blame the people (like Bengen) who ARE responsible for the intellectual mistake for the millions of failed retirements. People made mistakes. That’s just one of those things. There is no evidence that the mistake was intentional, that the aim was to cause millions of failed retirements. So I don’t see that there is any blame to cast there. Greaney’s abusiveness IS intentional. That’s why I cast blame on him in a way that I do not cast blame on Bengen or lots of others. You suggest that Greaney’s abusiveness has not hurt the millions of people who have never heard of him or me. I disagree. I built the Retire Early board at Motley Fool into the #1 discussion board at that site with a purpose in mind — I wanted to teach millions of people how to achieve financial independence early in life. It was my intent to spread the word about what we learned about safe withdrawal rates to everyone on the planet. Greaney blocked that process from moving forward with his criminally abusive behavior. Wade Pfau and I intended to work together to get our grounds-breaking study showing that Valuation-Informed Indexing is superior to Buy-and-Hold featured on the front page of the New York Times. Greaney stopped that from happening by threatening to get Wade fired from his job if he continued doing honest work in this field. He destroyed millions of middle-class lives with that criminal act. Has anyone ever been more deserving of a long prison sentence? Valuation-Informed Indexing is a pure good. It’s all upside and zero downside. And millions of middle-class people who very much need access to honest and informed reports of […]

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Just because you were able to browbeat Wade into emailing the Trinity guys doesn’t mean I’ll do your bidding too. Set up your own damn forum. But I promise I’ll read the historical transcript. Okay. Related PostsGoon Poster to Rob: “You Have Stated What You Think Are Problems. People Have Responded As to How They Disagree. People Eventually Got Angry Because of Repetitive Comments Going in Circles.”“Part of the Job is to Describe the Pressures that Caused so Many Generally Good and Smart People Either to Participate in the Cover-Up or at the Minimum Tolerate It. I Post These Goon Conversation Blog Entries to Help People Come to a Full Understanding of What Happened.”“Wade Pfau Never Wrote Any Words of That Nature Until You Threatened to Send Defamatory E-Mails to His Employer. Words That Are Said As the Result of Intimidation Tactics Don’t Count. Wade Said What He Really Believes About Safe Withdrawal Rates and About Valuation-Informed Indexing and About Me in Hundreds of E-Mails That He Exchanged With Me, Many of Which I Have Reported on at My Site.”Rob Bennett to Wade Pfau: “It is 100 Percent Wrong That People Posting at Bogleheads Feel Intimdated re Posting My Name…. By Using My Name, You Help Others Get Over Their Feelings of Intimidation”“After the Crash, the Floodgates Open. People Will Give Up Their Feelings of Embarrassment and Shame and Become Determined to Get Things Back on the Right Track. At That Point the Owners of the Bogleheads Forum Are Not Going to Be Resisting My Efforts to Take Over. They Are Gong to Be Asking Me to Take Over. We Are Going to Be Friends.”Buy-and-Hold Goon to Rob: We Have Only Your Word That Wade Ever Said That, or Ever Even Mentioned VII By Name. He Certainly Says Nothing of the Kind Today. In Fact, To You, He Says Nothing At All.”

Set forth below is the text of a comment that I recently put to the discussion thread for another blog entry at this site: “I think Bengen is wrong. I think that I have a responsibility to say so.” And so you do. Here, behind his back. But you won’t express your math-free gut-feel opinion in a comment section where he might see it. How is that living up to your responsibility? No. I engaged in an e-mail conversation with Bengen a number of years back. I told him that I think he is wrong re safe withdrawal rates. Set up a debate at the Bogleheads Forum. We can have Bengen there. We can have me there. We can have Bogle there. We can have Shiller there. We can have Greaney there. We can have Linduaer there. We can have Pfau there. See how it goes. No death threats. No demands for unjustified board bannings. No thousands of acts of defamation. No threats to get academic researchers fired from their jobs. We’ll make history. Rob Related PostsGoon Poster to Rob: “You Have Stated What You Think Are Problems. People Have Responded As to How They Disagree. People Eventually Got Angry Because of Repetitive Comments Going in Circles.”“We Should Be Asking Bogle Where He Got That Number If He Did Not in Fact Pull It Out of His Backside. Since He’s Available at the Bogleheads Forum and Appears at the Annual Meeting, That’s the Perfect Place to Put Him on the Hot Seat.”Buy-and-Hold Goon to Rob: “I and Many Others Are Confident in Buy–Hold-and-Rebalance. You Seem to Be the Only One Confident in Valuation-Informed Indexing.”Goon Poster at Value Walk Site: “All One Needs to Do Is Read Your Posts and See That the Vast Majority of Your Posts Include Complaints About What You Think of Shiller, Bogle, Pfau and Others. You Want to Talk About Taking People Down, Down, Down. Just Read Your Own Posts.”“Most People Who Agree With Shiller Hold Back From Exploring All the Implications of His Ideas Publicly. That’s Why Valuation-Informed Indexing Has Only Won Over 20 Percent of the Population in 34 Years. I Want It to Win Over 100 Percent of the Population. So I Say Things in the Way in Which They Must Be Said for Us to Get to 100 Percent.”“It’s ALL a Guide. But You Buy-and-Hold Goons Don’t ACT Like It’s All a […]

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: It makes perfect sense. You despise Greaney. You just won’t say that, so you blindly attack his work. Do you know how many Google hits there are out there for “rob bennett” “millions of busted retirements”? Lots. And the cause of all those busted retirements? The 4% rule. Now, magically, you have no problem with it. 4%, 4.5%, whatever, it’s all good, let’s just get along. Today you say “Greaney has destroyed millions of middle-class lives with his insanely abusive behavior.” Which is absurd, but it clearly shows your problem with him is personal. Until someone says it’s personal. Then the problem is back to the 4% rule. I don’t despise John as a person even a tiny bit. I had a lot of good times with the guy. I never would have had those times if he had not started that Retire Early board. When I was starting work on the book that became “Passion Saving,” I asked John to be my co-author. Why would I do that if I despised him? This claim makes no sense. And it’s not right to say that I blindly attack his work. I reviewed his retirement study when he published it as a report at the Soapbox.com site. I gave it a five-star review. I felt a little funny about doing that because I knew at the time (but had not come out publicly and said so) that he got the numbers wrong in his study. I rationalized what I did on grounds that his study was a significant advance on the retirement literature that was in place before he came on the scene. I still believe that to be the case. Peter Lynch was the manager of the Magellan fund. He was a pretty big deal. Lynch said that the safe withdrawal rate was 7 percent. Greaney said it was 4 percent. Greaney was a lot closer to the mark than Lynch was. Not bad for a guy whose only qualifications to write about the subject were that he (like me) had figured out how to get his words posted to an internet site. So I like the guy as a person and I admire his work. But, yes, you are right that I believe that Greaney […]